EU Links First €3.2 bn Disbursement to Tax Reforms

On 20 May 2024 the European Commission said the first €3.2 billion tranche of the macro-financial assistance of the €90-billion EU loan will be released in June only if Kyiv adopts fiscal reforms: a tax on digital-platform income (e.g., Uber), an expansion of the 20 % VAT to foreign parcels, and a customs-code update.

Kyiv Independent

The €90-billion loan, approved by EU leaders in 2024, replaces a plan to use immobilised Russian assets. Half the funds target 2026-2027, with €8.4 billion for macro-financial assistance. The EU aligned conditions with the International Monetary Fund (IMF). European Economic Commissioner Valdis Dombrovskis leads negotiations; the European Commission drafts the conditionality framework. Ukraine’s parliament (the Rada) must ratify the reforms; Finance Ministry spokesman Dmytro Gerasymenya says the government is finalising the agreement. The IMF provides parallel guidance, and opposition lawmaker Yaroslav Zheleznyak (People’s Front) has questioned support.

The Straits TimesReutersKyiv IndependentKyiv IndependentThe Straits Times

• 18 May 2024 – EU states approve macro-financial assistance conditions.

Kyiv Independent

• 20 May 2024 – Commission signs MOU and publishes reform requirements.

Kyiv Independent

• June 2024 – First €3.2 billion tranche scheduled, pending Rada ratification.

Kyiv Independent

The loan totals €90 billion; macro-financial assistance is €8.4 billion, with €3.2 billion as the first tranche. Defense for 2026 receives €28.3 billion, general-budget aid €16.7 billion. Kyiv has missed about 20 reform deadlines and needs 226 of 392 votes to pass the parcel-VAT amendment.

Kyiv Independent

EU officials say the conditionality “strengthens Ukraine’s economic and financial resilience while supporting reform and anti-corruption efforts.” Dombrovskis added the memorandum “finalises negotiations” and that the next step is Ukrainian signature and Rada ratification. Kyiv’s finance ministry confirmed ongoing work on the reforms. Delays could postpone defense funding and widen a €19.6 billion budget shortfall for 2026.

Kyiv Independent

Opposition MP Yaroslav Zheleznyak warned the parcel-VAT amendment lacks sufficient backing, noting the 226-vote threshold. Analysts cite a “communication crisis” and limited political will as drivers of the slowdown, especially amid wartime pressures.

The Straits Times

Sources differ on the reform focus: one cites a digital-platform income tax, another emphasises expanding VAT on foreign parcels. The exact timetable for Rada ratification remains unclear, and no public estimate exists for when all IMF-linked reforms will be completed.

Kyiv Independent

• “We have finalised our negotiations with Ukraine on the memorandum of understanding underpinning our macro financial assistance program as part of the Ukraine support loan,” — Valdis Dombrovskis, European Economic Commissioner

Reuters

• “The programme will strengthen Ukraine’s economic and financial resilience, while supporting reform and anti-corruption efforts,” — Valdis Dombrovskis

The Straits Times

• “One opposition lawmaker, Mr Yaroslav Zheleznyak, told Bloomberg that he doesn’t see enough support to pass the measure, which would require at least 226 of 392 available votes.” — Yaroslav Zheleznyak, Opposition Lawmaker

The Straits Times

• “More reforms equal more money.” — Senior EU official, Kyiv Independent

Kyiv Independent

The Rada must approve the tax measures before the June payout. A second €3.2 billion tranche is slated for September, contingent on further reforms. The EU is also reviewing the use of immobilised Russian assets to back future loan installments.

Kyiv Independent