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EU could use a plan similar to Covid-era work support to skirt Hungarian veto and lend €20 billion to Ukraine, FT reports

Photo by Markus Spiske / Unsplash

The European Union is preparing a workaround plan to fund Ukraine with a financing arrangement similar to the one used to provide countries with cheap financing during the Covid era, the Financial Times reported, citing unnamed sources.

The plan could provide Ukraine with up to €20 billion in financing even if the €50 billion Ukraine Facility funding plan is vetoed by Hungarian Prime Minister Viktor Orban at a summit of EU leaders scheduled for Feb 1, the newspaper wrote.

Under the workaround plan, EU member states could issue guarantees to the EU budget that would allow the European Commission to borrow up to €20 billion on capital markets for Kyiv next year, the newspaper wrote, citing unnamed "people briefed on the talks."

The backup plan, similar to the one used to distribute €100 billion to EU countries for short-term work support during the Covid lockdowns, would not require unanimous approval by EU member states. However, the backup plan could only include loans, and no grants.

The backup plan could be used as a stopgap measure that would enable the International Monetary Fund to release its next $900 million tranche of funding for Ukraine.

Another backup plan, which would require approval by a weighted majority of EU member states, would see the rollover for as long as a year of the funding structure that allowed the provision of €18 billion in cheap loans to Ukraine this year, the Financial Times reported.

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