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6 Oct, 2023 20:59

EU audit chamber warns of Ukraine cash crisis

Propping up Kiev has increased the bloc’s exposure to financial losses, the European Court of Auditors reported
EU audit chamber warns of Ukraine cash crisis

The EU’s financial watchdog has warned that Ukraine may not be able to repay its loans, potentially adding tens of billions of euros to the bloc’s debt. After lending Kiev €34 billion last year, the EU is offering it another €50 billion in grants and loans.

In a report on the EU’s 2022 budget published on Thursday, the European Court of Auditors noted that the bloc’s exposure to future financial losses increased from €204.9 billion ($216.8 billion) in 2021 to €248.3 billion ($262.8 billion) by the end of last year.

“Part of the increase is due to the EU’s financial assistance to Ukraine,” the report stated, pointing out that this assistance – which does not include military aid – more than doubled last year from  €7 billion ($7.4 billion) to €16 billion ($16.9 billion). 

An additional tranche of long-term loans agreed last December, totaling €18 billion ($19 billion) will only increase Brussels’ exposure in the future, the report warned.

Despite the risk that Ukraine may not be able to repay its debts, the European Commission is currently working on another aid package for Ukraine worth €50 billion ($53 billion), of which €33 billion ($35 billion) would take the form of long-term loans.

The commission’s plans have faced stiff opposition from Hungary, whose government has also vetoed the delivery of a €500 million arms package for Kiev. Last week, Hungary suggested splitting the €50 billion into two installments, with the second half to be released after Ukraine’s needs are re-evaluated.