Ukraine faces the risk of losing a portion of its EU funding.

Analysts report that in the first quarter, Ukraine failed to meet four indicators required under the Ukraine Facility program on time. This situation may not only postpone the disbursement of the program’s next loan to Ukraine but could also cause a significant reduction in available funding.

Following the European Commission’s implementation of a new system for distributing partial tranches, each of these indicators now has a monetary equivalent. Consequently, not meeting specific conditions leads to an automatic decrease in funds that are issued.

If Ukraine does not rectify these gaps soon, it risks receiving only around €2.5B instead of the planned €4.5B. If the non-fulfillment of obligations is officially acknowledged, Ukraine will be granted an additional 12 months to meet the indicators; otherwise, any unused resources will be lost.

So far, Ukraine has obtained loans totaling ₴185B (equivalent) through the ERA and Ukraine Facility programs, with €3.1B transferred under the Ukraine Facility and an additional €1B through the EU’s ERA mechanism. Furthermore, the World Bank has provided $50M under the THRIVE initiative. However, the next tranche under the Ukraine Facility will be delayed longer than anticipated.