Ukraine risks delay in receiving $4.3 billion instalment from EU’s Ukraine Facility due to reform shortcomings, Foreign Ministry says

Deputy Foreign Minister Yevhen Perebyinis issued a letter to cabinet ministers on Oct. 23 warning that the European Union has notified Ukraine that the next tranche of 4 billion euros ($4.3 billion) from the EU’s Ukraine Facility may be delayed until next year unless expected aspects of corruption reforms are completed by the end of this month.

“The EU stated that if Ukraine does not finish all internal procedures to approve and adopt the law by the end of October 2024, the 4 billion euros financing will be re-allocated for the following year,” Perebyinis wrote in the letter.

The initial payment, scheduled to be dispersed in November, risks delay amid stalled progress on improving regulations for plea agreements in corruption cases. The necessary changes to Ukraine’s Criminal Code were supposed to have been finished by the third quarter of 2024, however, they were only approved by parliament in the first reading on Oct. 9.

It was not immediately clear as to when the payment would be postponed until if Ukraine’s parliament fails to fully adopt the new changes.

Following Russia’s full-scale invasion, the European Union created a list of reforms Ukraine must implement as a necessary step toward Kyiv’s accession into the alliance.

Last week, President Volodymyr Zelensky signed a bill reforming the State Customs Service and introduced to tackle corruption and save funds otherwise lost to smuggling, with a myriad of other reforms ongoing.

The Ukraine Facility, approved by the EU in February, allocates 33 billion euros ($36 billion) in loans and 17 billion euros ($18 billion) in grants to Kyiv. The EU Council approved the framework agreement in mid-May, setting out the Ukrainian government’s tasks for recovery, reconstruction, and modernization.

The besieged country received $42.5 billion in external financing from various donors last year, allowing it to function amid the ongoing war. The International Monetary Fund said Ukraine will need roughly the same sum to support its budget this year.

According to Finance Minister Serhii Marchenko, the current pledges are still not sufficient to cover the country’s needs, adding that Ukraine will likely need an additional $12-15 billion in foreign financial support next year.