Statement by Executive Vice-President Dombrovskis at the ECOFIN Press conference

Thank you minister, good afternoon everyone.

It is a pleasure to be back in Prague.

Thank you for hosting us in this beautiful city.

As the minister already outlined, today’s discussions in Ecofin focused on two main topics: financial support for Ukraine and our economic policy response to the war in Ukraine and its economic implications.

As regards financial support for Ukraine, it is excellent news that ministers have endorsed the next part of our exceptional macro-financial assistance programme and agreed to provide national guarantees required to make a further €5 billion available in concessional loans to Ukraine.

This is part of the overall €9 billion exceptional macro-financial assistance package for Ukraine. Its first part of €1 billion was already paid out in early August and we are now working on operationalising the remaining amount in this package.

Obviously, we need to think how we further support Ukraine because Ukraine is an economy at war.

Its economic situation has deteriorated dramatically due to Russia’s protracted war of aggression.

There are estimates that Ukraine’s GDP is set to fall by up to 15% this year. So clearly, Ukraine needs short-term financial assistance to keep the country running on a daily basis and to maintain essential services.

For this year alone, the International Monetary Fund estimates its balance of payments gap at $39 billion.

That does not include costs for the country’s longer-term reconstruction.

Since the invasion began, the EU, its Member States and financial institutions – like the EIB and EBRD – have mobilised €9.5 billion to support Ukraine. But still, more short-term financial assistance will also be needed.

And we will need to look beyond immediate needs.

The long-term costs for Ukraine’s reconstruction are likely to keep growing as long as war continues.

So today ministers also discussed options for funding the long-term reconstruction of Ukraine.

Apart from this, we discussed the policy implications of the war in Ukraine on the EU and our economy, and the necessary policy response.

Clearly, we see a marked economic slowdown in the second half of the year, and we see surging inflation.

So we need to find a delicate balance between promoting growth, controlling inflation and protecting the most vulnerable.

We also see tighter financing conditions and rising borrowing costs – which all reduces governments’ room for policy manoeuvre. And it’s also clear that fiscal support measures should not contradict the ECB’s efforts to reduce inflation.

When we discussed the support measures, these should be targeted and temporary, compatible with the green transition.

One of the major implications of the war in Ukraine is surging energy prices. Correspondingly, the issue of how to address them is very much on everyone’s minds.

This week, the European Commission came with a set of policy proposals – or options – for how we can respond to the situation in energy markets.

I will not go into detail on these measures because they were not part of today’s Ecofin agenda.

In parallel in Brussels, there was an Energy Council which was discussing exactly these energy issues. Thank you.

Compliments of the European Commission.