European Union nations approved new aid for Ukraine on Tuesday as the country grapples with mounting economic damage from Russia’s invasion.
Finance ministers from the 27 EU nations gave the go-ahead Tuesday for 1 billion euros ($1 billion) in loans to the Ukrainian government.
The sum brings the total amount of EU macro-financial assistance to Kyiv this year to 2.2 billion euros. An initial €1.2 billion EU loan package was given the green light by the bloc’s finance chiefs days before Russia’s large-scale attack on February 24.
The European Commission, the executive arm of the EU, proposed in mid-May extra aid of up to 9 billion euros for Ukraine. The planned payment of €1 billion is part of this initiative, which comes as Russia advances in eastern Ukraine and casualties mount on both sides.
“This will give Ukraine the necessary funds to cover urgent needs and ensure the functioning of critical infrastructure,” Zbynek Stanjura, finance minister of the Czech Republic, which currently holds the rotating EU presidency, said in a statement.
Ukraine said last week that its postwar reconstruction would cost $750 billion. Meanwhile, the Kyiv government is estimated to need around 5 billion euros a month to keep the economy afloat.
The Group of Seven countries, including the United States, pledged to help Ukraine meet its short-term financing requirements, in addition to providing military aid to Kyiv and imposing wide-ranging economic sanctions against Russia.
The five-month war is having economic and social repercussions around the world, ranging from potential food shortages in Africa to energy supply disruptions in the EU. These, in turn, increase the risk of a global recession.
The EU on Thursday is expected to lower its forecast for economic growth across the bloc in 2022 for the third time this year.
In May, the European Commission projected that the EU’s gross domestic product would expand by 2.7% in 2022, lowering the February forecast of 4% growth. February’s outlook was itself weaker than November’s projection of 4.3% EU GDP growth this year.
In the last two months, Russia has cut or reduced natural gas deliveries to more than 10 EU countries and inflation in Europe has continued to rise. In June, inflation in the 19 countries that share the euro hit a record 8.6%.
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