What changed between the adopted text of 17 Oct 2023 and the adopted text of 27 Feb 2024

Removed:(76) It should be possible for Ukraine to request the interest rate subsidy and the waiver of administrative costs each year.

Removed:(77) The financial liability from loans under this Regulation should not be supported by the External Action Guarantee, by derogation from Article 31(3), second sentence, of Regulation (EU) 2021/947. Loans type of support under the Facility should constitute financial assistance within the meaning of Article 220(1) of Regulation (EU, Euratom) 2018/1046. In considering the financial risks and the budgetary coverage, no provisioning should be constituted for the financial assistance in the form of loans under the Facility, as proposed to be guaranteed over and above the ceilings, and, by derogation from Article 211(1) of Regulation (EU, Euratom) 2018/1046, no provisioning rate should be set.

Removed:(78) It is important to guarantee both flexibility and programmability as well as stability in providing Union support to Ukraine. For that purpose, payments under the Facility should occur according to a fixed quarterly schedule, subject to availability of funding, based on a payment request submitted by Ukraine and following verification by the Commission of the satisfactory fulfilment of the relevant conditions, including all relevant milestones and targets. In case a condition is not fulfilled in accordance with the indicative timeline set in the decision approving the Plan, the Commission should deduct from the payment an amount corresponding to those conditions following a pre-set methodology for partial fulfilment. The disbursement of the corresponding withheld funds could take place during a subsequent payment window and up to twelve months after the original deadline set out in the indicative timeline, provided the conditions have been fulfilled.

Removed:(79) In order to ensure that Ukraine has access to sufficient financing to cater for its macro-financial stability needs and initiate the recovery, reconstruction and modernisation of the country, Ukraine should have access to up to 7% of the non-repayable financial support and loan in the form of a pre-financing, subject to availability of funding and to the respect of the precondition for the support to Ukraine under the Facility.

Removed:(80) By way of derogation from Article 116(2) and (5) of Regulation (EU, Euratom) 2018/1046, it is appropriate to set the payment deadline starting from the date of the communication of the decision authorising the disbursement to Ukraine and to exclude the payment of default interest by the Commission to Ukraine.

Removed:(81) Transparency in all phases of the implementation of the Facility is an ongoing prerequisite to Union support. Ukraine should publish up to date data on persons, entities and final beneficiaries receiving amounts of funding exceeding the equivalent of EUR 100 000 for the implementation of reforms and investments specified in the Ukraine Plan. The disclosure of a legal entities’ beneficial owner should be a mandatory precondition for the reception of funding. In addition, a list of the 2000 largest final beneficiaries should be kept up-to-date and published by Ukraine. The information should not be published, if duly justified, where disclosure risks threatening the rights and freedoms of the persons or entities concerned or seriously harming the commercial interests of the recipients. The framework agreement should include precise rules and a timeframe on the collection of data by Ukraine and the access for the Commission,OLAF and where applicable, the European Public Prosecutor’s Office (EPPO), including as regards the format of the information and access to information rights for the European and Ukrainian public, as well as the Verkhovna Rada and the European Parliament.

Removed:(82) Under pillar II of the Facility, an investment framework should be set up, aiming to support recovery and reconstruction investments undertaken by private sector companies, municipalities, state-owned enterprises or other actors. The Ukraine Investment Framework should address priorities identified in the Ukraine Plan, and support its objectives and its implementation. The Ukraine Investment Framework should involve Ukrainian authorities in its governance.

Removed:(82a) In view of the need to coordinate international support to the recovery, reconstruction and modernisation of Ukraine, international organisations, international financial institutions, in particular EIB and the EBRD as key financial institutions, as well as, Member States, national development banks, third countries, or other donors can play a major role in financing or as implementing partners of measures or projects supported by the Facility. National and local private and state-controlled financial institutions in Ukraine can be involved in the implementation of the instruments.

Removed:(83) The investment framework should constitute an integrated financial package supplying financing capacity in the form of financial instruments, budgetary guarantees and blending operations in Ukraine. Support under the Ukraine Investment Framework should be implemented in indirect management, notably drawing on the financial and technical capacities of international financial institutions and European development finance institutions, including their participation to the risk linked to investments with their own resources. Given the scale of recovery and reconstruction investments in Ukraine that will require risk-sharing, it is necessary for the Union to establish a dedicated guarantee capacity, the Ukraine Guarantee. Operations covered by the Ukraine Guarantee will be implemented in accordance with Article 208(4) of Regulation (EU, Euratom) 2018/1046. Export credit agencies and other financial institutions providing trade facilitation support may act as financial intermediaries. In implementing and managing the Ukraine Guarantee, the Commission should ensure close coordination with support implemented in the framework of the European Fund for Sustainable Development Plus established under Regulation (EU) 2021/947.

Removed:(84) The flexibility of the support under the Facility should be enhanced by providing for flexible implementation of the Ukraine Guarantee, which might be granted gradually. It is appropriate to derogate from Article 211(2), second sentence, of the second subparagraph of Regulation (EU, Euratom) 2018/1046 to allow the constitution of provisioning until 31 December 2027 to be equal to the amount of provisioning corresponding to the guarantee granted instead of the amount of global provisioning. As part of the derogation, it should also be possible to constitute the provisioning gradually to reflect the progress in selection and implementation of the financing and investment operations supporting the objectives of the Facility, instead of reflecting the financial statement referred to in Article 211(2), second sentence, of the second subparagraph of Regulation (EU, Euratom) 2018/1046.

Removed:(85) In order to efficiently use the funds under this pillar, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of amending the provisioning rate for the Ukraine guarantee. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and to the Council.

Removed:(85a) To facilitate the private investment and the development of small and medium businesses, it is necessary to dedicate a portion of the funds backed by the Ukraine Guarantee to start-ups, Small and Medium-sized Enterprises (SMEs), as defined in Article 2 of the Annex to Recommendation 2003/361/EC, and to report and track the allocation of such portion of funds.

Removed:(86) Under pillar III of the Facility, support should mainly aim at progressively aligning to Union rules, standards, policies and practices (‘acquis’) with a view to future Union membership, thereby contributing to the implementation of the Ukraine Plan. Relevant recommendations of international bodies and regional alliances, such as the Council of Europe and the Venice Commission should also be taken into account in this process. Support should also aim at strengthening stakeholders, including democratic institutions, courts, social partners, civil society organisations and local authorities’ capacities as well as the capacity building of civil society actors including in their public scrutiny role.

Removed:(87) In accordance with Regulation (EU, Euratom) 2018/1046, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council and Council Regulations (EC, Euratom) No 2988/95, (Euratom, EC) No 2185/96 and (EU) 2017/1939 and Directive (EU) 2017/1371 of the European Parliament and of the Council, the financial interests of the Union are to be protected by means of effective measures, including measures relating to the prevention, detection, correction and investigation of irregularities, fraud, corruption, conflict of interest, double funding, to the recovery of funds lost, wrongly paid or incorrectly used, and measures to effectively investigate, prosecute and bring to judgment the perpetrators of, and accomplices to, criminal offences affecting the funds provided under the Facility. The Commission services should be provided with sufficient administrative capacities and personnel to ensure these objectives.

Removed:(87a) Whereas, in accordance with Regulation (EU) 2017/1939, the EPPO is competent in respect of the criminal offences affecting the financial interests of the Union, even if the main criminal conduct takes place outside the Union, subject to extraterritorial jurisdiction of a participating EPPO Member State over an offence affecting the financial interests of the Union, it is essential, in accordance with Article 24(1) of that Regulation, that the Commission, the Audit Board and OLAF report to the EPPO, without undue delay, any criminal conduct affecting the funds awarded under this Regulation, with a view to EPPO assessing its competence and, if appropriate, initiating an investigation. It is furthermore essential that Ukrainian competent authorities treat, without delay, mutual legal assistance requests and extradition requests issued by EPPO and Member States’ competent authorities in relation to these funds, in accordance with the relevant instruments concerning international cooperation in criminal matters.

Removed:(88) In particular, in accordance with Regulations (Euratom, EC) No 2185/96 and (EU, Euratom) No 883/2013, the European Anti-Fraud Office (OLAF) should be in a position to carry out administrative investigations, including on-the-spot checks and inspections, with a view to detecting and establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union and to reporting any criminal conduct to the EPPO, in accordance with Article 24(1) of Regulation (EU) 2017/1939.

Removed:(89) In accordance with Regulation (EU, Euratom) 2018/1046, the necessary rights and access should be granted to the Commission, the European Parliament, OLAF, the European Court of Auditors and, where applicable the European Public Prosecutor’s Office (EPPO) where relevant, including from third parties involved in the implementation of Union funds. Ukraine should also use the Early Detection and Exclusion System and report irregularities in relation to the use of the funds to the Commission.

Removed:(90) The reinforcement of internal control systems, including ex-ante controls, the fight against any forms of corruption, nepotism, favouritism or fraud, the promotion of transparency, good administration, and efficient public financial management, and verification by an independent external auditor, are important reform priorities for Ukraine and increase the legitimacy of support for Ukraine and should be supported by the Facility.

Removed:(91) The Commission should ensure that the financial interests of the Union are effectively protected under the Facility. To this end, an independent Audit Board should be set up to provide the Commission with information on possible mismanagement of funds and guarantee that a declaration of assurance is obtained through an independent external audit. The Audit Board should be subject to the reporting obligations to EPPO, in accordance with Article 24(1) of Regulation (EU) 2017/1939. Such information should be made available to OLAF, EPPO and where appropriate to the relevant Ukrainian authorities, in particular the Accounting Chamber of the Verkhovna Rada. The Commission, with the assistance of the Union delegation, should be entitled to perform regular checks on how Ukraine implements funds along the whole project life cycle. The Commission should be provided with sufficient funding and human resources to perform the audit and checks. The Audit Board should ensure regular dialogue and cooperation with the European Court of Auditors.

Removed:(92) While it is primarily the responsibility of Ukraine to ensure that the Facility is implemented in compliance with applicable standards, taking into account the principle of proportionality and the specific conditions under which the Facility will operate, the Commission should be able to receive sufficient assurance from Ukraine in that regard. To that end, Ukraine should commit in the Plan to improve its current management and control system and to recovering amounts misused. Ukraine should also commit in the Plan to improve detection, investigation and prosecution of criminal offences affecting the funds provided under the Facility. In that regard, Ukraine should commit to ensure that the competent Ukrainian authorities would treat, without delay, mutual legal assistance requests and extradition requests issued by the EPPO and Member States’ competent authorities. Ukraine should establish a monitoring system feeding into an annual progress report. Ukraine should collect data and information allowing the prevention, detection and correction of irregularities, fraud, corruption and conflicts of interests, and allowing to effectively investigate, prosecute and bring to judgment the perpetrators of, and accomplices to, criminal offences affecting the funds provided under the Facility. The framework agreement and the financing and loan agreements should provide for the obligations of Ukraine to ensure the collection of, and access to, adequate data and information on persons and entities receiving funding for the implementation of measures of the Ukraine Plan. The framework agreement, the financing agreement and the loan agreement should be made available to the European Parliament, the Council and the Verkhovna Rada.

Removed:(93) The Union financial interests should also be protected when the funds are implemented in direct management through grants and procurement and indirect management with pillar assessed entities, in particular under the second and third pillar of the Facility.

Removed:(94) Work programmes should be adopted to implement the assistance under the Facility.

Removed:(95) The communication capacities of Ukraine should be enhanced in order to ensure existence of strong and free pluralistic media and to promote understanding of Union values and the benefits and obligations of potential Union membership, while addressing disinformation, foreign information manipulation and interference. Visibility of the Union funding ▌also needs to be ensured.

Removed:(96) The Commission should ensure clear monitoring and evaluation mechanisms are in place in order to provide effective accountability and transparency in implementing the Union budget, and to ensure effective assessment of progress towards the achievement of this Regulation’s objectives.

Removed:(97) The Commission should assess each year the implementation of support under the Ukraine Facility. It should allow the Committee established by this Regulation to have adequate information to assist the Commission. This information should also be made available to the European Parliament and the Council. For the effective monitoring of implementation, Ukraine should report once a year in an annual progress report on the implementation. Such reports prepared by the government should be appropriately reflected in the Ukraine Plan. Proportionate reporting requirements should be imposed on recipients of Union funding implemented under the second and third pillars of the Facility.

Removed:(98) In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council .

Removed:(99) The Commission will duly take into account Council decision 2010/427/EU and the role of the EEAS where appropriate, and in particular when monitoring the fulfilment of the precondition for Union support, in its assessment of the Ukraine plan and while gathering advice on the Ukraine investment framework.

Removed:(100) Since the objectives of this Regulation cannot be sufficiently achieved by the Member States but can be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary to achieve those objectives.

Removed:(101) In order to ensure continuity in providing support in the relevant policy area, this Regulation should enter into force as a matter of urgency on the day following that of its publication in the Official Journal of the European Union,

Removed:HAVE ADOPTED THIS REGULATION:

Removed:General provisions

Removed:1. This Regulation establishes the Ukraine Facility (the ‘Facility’).

Removed:It lays down the objectives of the Facility, its financing, the budget for the period 2024-2027, the forms of Union funding under it and the rules for providing such funding.

Removed:2. The Facility shall provide assistance to Ukraine under the following three pillars:

Removed:(a) Pillar I: financial support to be provided to Ukraine for the delivery of reforms and investments to implement the Ukraine Plan as well as to maintain macro-financial stability of the country, as set out in Chapter III;

Removed:(b) Pillar II: a specific Ukraine Investment Framework to support investments and provide access to finance as set out in Chapter IV;

Removed:(c) Pillar III: technical assistance and related support to Ukraine to design and implement EU accession-related reforms and to foster Ukraine’s administrative capacity, as well as other relevant activities, as set out in Chapter V.

Removed:For the purposes of this Regulation, the following definitions apply:

Removed:1. ‘Framework agreement’ means an arrangement concluded between the Commission and Ukraine laying down the principles of the financial cooperation between Ukraine and the Commission under this Regulation.

Removed:2. ‘Measures’ means reforms and investments under the Ukraine Plan set out in Chapter III.

Removed:3. ‘Conditions’ means qualitative or quantitative steps relating to ensuring the maintenance of economic and financial stability or relating to the implementation of the reforms and investments set out in the Ukraine Plan set out in Chapter III.

Removed:4. ‘Blending operation’ means an operation supported by the Union budget that combines non-repayable forms of support or repayable forms of support or both, from the Union budget with repayable forms of support from development or other public finance institutions, or from commercial finance institutions and investors.

Removed:1. The general objectives of the Facility shall be to support Ukraine to:

Removed:(a) address the social, economic and environmental and psychological consequences of Russia's war of aggression, thereby contributing to the recovery, reconstruction, restoration and modernisation of the country and to the post-war recovery of Ukrainian society;

Removed:(b) foster democratic, social, economic and environmental and territorial cohesion and resilience and progressive integration into the Union and global economy and markets and upward economic, social and environmental convergence towards EU standards;

Removed:(ba) improve access to capital, including through advancing the institutional banking and insurance framework, to strengthen entrepreneurial activity and advanced research and development;

Removed:(c) provide additional support for Ukraine in adopting and implementing the political, institutional, legal, administrative, social and economic reforms required, to progressively align to Union rules, values, standards, policies and practices (‘acquis’) with a view to future Union membership, thereby contributing to mutual stability, security, peace, prosperity and sustainability.

Removed:2. The specific objectives of the Facility shall include:

Removed:(a) help maintain the macro-financial stability of the country and ease Ukraine’s external and internal financing constraints, in particular by providing temporary payment support, including for recurring expenses, as part of macro-economic assistance to ensure fiscal stability and the continued functioning of the Ukrainian State;

Removed:(b) rebuild and modernise infrastructure damaged by the war, such as energy infrastructure, water systems, internal and cross-border transport networks including rail, roads and bridges and border crossing points, educational and cultural infrastructure, and foster modern, improved and resilient infrastructures; restore food production capacities; help address social and health challenges and, improve and strengthen the social care systems and their accessibility, including with regard to psychological and psychosocial rehabilitation, in particular for specific groups affected by the war, such as veterans, Internally Displaced Persons, single parents, war widows and widowers, orphans, children, especially those without parental care, including children in or from institutions, persons with disabilities, people with long-term health conditions inflicted by the war, minorities, young and elderly people, and other persons at-risk;

Removed:(ba) strengthen cyber security and defence as well as resilience against disinformation, foreign information manipulation and interference; contribute to the demining and decontamination effort as enablers of recovery and reconstruction work;

Removed:(c) foster the transition to a sustainable , climate neutral and inclusive economy and a stable investment environment; support the integration of Ukraine into the Union’s Single Market; repair, rebuild and improve social infrastructure, such as housing, social, sports, youth and healthcare facilities, with a specific emphasis on trauma care, schools and higher education institutions considering local security requirements and research infrastructure; strengthen economic and social development and inclusion, with particular attention to women and girls, as well as youth, including through quality education, training, reskilling and upskilling, exchange programmes for students, researchers and public servants, and employment policies, including for researchers;

Removed:(ca) support culture and cultural heritage; strengthen strategic economic sectors; foster an institutional framework for investment and competition to enable private citizens, micro-businesses, start-ups, and small and medium-sized business to develop modern and competitive products and services, increasing Ukraine’s capacity to sustainably process its natural resources and market value-add products; support for sustainable agriculture and rural development, aquaculture and fisheries; restructure Ukraine’s financial markets, including banking sector and capital markets, improving the access to loans and insurance coverage; increase domestic revenue mobilisation; strengthen Ukraine’s ability to trade; take steps into reorienting the economy of Ukraine from a resource-centric model to a competitive framework akin to Member States’ model, diversifying and transitioning away from a heavy reliance on natural resources;

Removed:(d) further strengthen the rule of law, democracy, the respect of human rights and fundamental freedoms, including through strengthening democratic institutions, in particular the Verkhovna Rada, as well as regional and municipal representative bodies, and their powers of oversight and inquiry over the distribution of and access to public funds; promote an independent judiciary, reinforced security and strengthen the fight against fraud, corruption, and high level corruption, organised crime, favouritism, oligarchic structures and money laundering, aggressive tax planning, tax avoidance, tax evasion and tax fraud, and illicit firearms trafficking; fully abide by the principles of a free market economy characterized by free and undistorted competition that bars all anti-competitive practices; strengthen compliance with international law; strengthen freedom and independence of media and academic freedom as well as an enabling environment for civil society; foster social dialogue and civil society involvement; promote non-discrimination and tolerance, to ensure and strengthen respect for the rights of persons belonging to all minorities such as ethnic, religious, LGBTI, and the promotion of gender equality, gender mainstreaming and the overall empowerment of women and girls, as well as, the rights of children and persons with disabilities; reinforce the effectiveness of public administration, ensure access to information and the participation of civil society and youth in decision making processes and public scrutiny, and support transparency, structural reforms and good governance at all levels, including in the areas of public financial management and public procurement and State aid; support initiatives and bodies and organisations involved in supporting and enforcing democracy, international justice and anti-corruption efforts in Ukraine;

Removed:(da) create the conditions for Ukrainian Internally Displaced Persons and persons under temporary protection to come back home and get reintegration into the social and economic life of the country; create conditions for the reintegration of children and youth, including through the educational programmes supported by the Union so as to fill where necessary the educational gap resulting from the war circumstances; address the needs of young war veterans by providing opportunities for social integration and tackling war-caused traumas;

Removed:(e) develop and strengthen a sustainable green transition in all economic sectors, including Ukraine’s transition towards climate neutrality, in accordance with the Paris Agreement; improve the awareness of and fight against environmental crime through the full implementation of the Kyiv Protocol on Pollutant Release and Transfer Registers and ensuring compliance with nature protection laws; promote the digital transformation as an enabler for sustainable development and inclusive growth; ensure ecological rehabilitation following the environmental damages inflicted by military operations and contribute to decontamination, the demining effort and clearance of other explosive remnants of war as well as oil or chemical pollution caused by military activity; contribute to the efforts to document, map and measure the damage and related consequences;

Removed:(f) support political and administrative decentralisation and local development, especially by ensuring meaningful consultation and a level playing field for all levels of government when accessing funds via open, fair, neutral, and transparent procedures;

Removed:(fa) support cross-border cooperation with the Member States bordering with Ukraine in the areas such as trade, environment protection and fight against international crime.

Removed:1. Cooperation under the Facility shall be based on and shall promote the development effectiveness principles, where applicable, across all modalities, namely ownership of development priorities by Ukraine, a focus on results, inclusive development partnerships, transparency and mutual accountability. The cooperation shall be needs-based and based on the effective and efficient allocation of resources and use of those resources. The Facility shall avoid the excessive sectoral or geographical concentration of resource allocation and use of resources and ensure an appropriate geographical balance of projects.

Removed:2. Support from the Facility shall be additional to the support provided under other Union programmes and instruments. Activities eligible for funding under this Regulation may receive support from other Union programmes and instruments provided that such support does not cover the same cost.