Vice-President Valdis Dombrovskis

Opening statement at the European Parliament Plenary debate

On the proposal for further macro-financial assistance (MFA) to Ukraine

Strasbourg, 12 June 2018

 

 

Madam Chair,

Honourable Members,

Let me first thank the Rapporteur, Mr. Walesa and the INTA Committee for their work on this report. I also thank the AFET Committee for its valuable contribution to the debate.

The partnership between Ukraine and the EU has grown deeper and stronger.

Today, I am seeking your support to maintain this momentum, through the adoption of a further proposal for macro-financial assistance, or so called MFA.

A look at the past MFA operations since 2014 shows how important this support is for Ukraine.

Firstly, back in 2014, MFA was a key EU instrument to provide immediate financial assistance to Ukraine, in order to stabilize its economic and financial situation.  

Ukraine returned to economic recovery and growth in 2016 and 17 after two years of steep recession. It is an important success story not only for Ukraine but also for the EU.

Second, MFA has played a major role in supporting reforms in Ukraine – and particularly in stabilising Ukraine’s economy in the medium term. Through this programme, the EU has supported a broad range of anti-corruption reforms, including the establishment of anti-corruption infrastructure, spearheaded by the National Anticorruption Bureau. Reforms to its energy and public procurement markets have also helped to eliminate important sources of corruption.

 It has also helped Ukraine to improve its public finance management, to clean up its banking sector and to improve its business environment, for example by automating VAT refunds and reducing red tape.  

However, despite its recovery, Ukraine’s economic situation remains fragile. Russia's destabilising actions in Ukraine’s East continues and the security situation remains tense. Ukraine is paying a high price. For example, its defence spending reached 5% of GDP last year, which otherwise could be used for development of Ukraine.

 Ukraine’s debt-repayment obligations will increase substantially in 2018 and 2019 putting a very heavy burden on the state budget.

We cannot afford to let Ukraine fail. Therefore, a new MFA operation is necessary, along with other international support, in particular from the International Monetary Fund.

Having stressed the importance of this MFA proposal, let me add a clear message on reforms in Ukraine.

As always, this MFA proposal is strictly linked to reform conditions.  Due to delays with the implementation of agreed anti-corruption reforms, the Commission cancelled the last disbursement under MFA III in January this year.   

In order to give a clear political signal to the Ukrainian authorities that also the newly proposed MFA operation will be subject to strict conditionality, the Parliament, the Council and the Commission have agreed – at the initiative of the Parliament – to attach a Joint Statement to the legislative decision.

I am convinced that this Joint Statement adequately addresses the key concerns of MEPs voiced in the Committee process.

First, the Joint Statement recalls that the political pre-conditions of MFA require Ukraine to respect democratic mechanisms, including a multi-party system, the rule of law and human rights under the scrutiny of the Commission and the European External Action Service.

Second, the Statement makes clear that the fight against corruption will be at the heart of the policy conditions in the Memorandum of Understanding to be agreed between the EU and Ukraine for this MFA operation.  Related issues like money laundering and tax evasion will also be taken into account for the conditionality of this operation.

Specifically, the unmet anti-corruption conditions from the previous MFA operation should be implemented. These conditions were the establishment of a verification system for asset declarations and the verification of companies’ beneficial ownership data.  Further MFA assistance will also be conditional on progress in setting up a well-functioning anti-corruption court.

Importantly, last week the Ukrainian Parliament adopted the Law on the High Anti-Corruption Court  by 315 votes, that is 88 votes more than needed for a majority. Yesterday (Monday) the law was signed by the President of Ukraine.

Let me also say that beyond that, Commissioner Hahn and myself have raised the issue of the obligation for e-declarations on anti-corruption activists. This remains an urgent issue to be addressed. Just like the reform of the Central Electoral Commission.

Honourable members,

We are at a crucial point in time in Ukraine, with the expiry of the IMF programme in March 2019 and presidential and parliamentary elections also looming next year. The window for reforms may be closing as elections approach, so it is important to get this MFA programme up and running in the shortest possible time. If we delay or turn our back on Ukraine, the risk of reform reversals would be high.

I hope that we will have your full support going forward.

Thank you very much.