The  EU Council and the European Parliament reached a provisional agreement on Monday to create a new special tool to support Ukraine's recovery, rebuilding and modernisation and its reform efforts on the road to EU accession.

The €50 billion Ukraine Fund will consolidate the EU's budgetary support for Ukraine into one single instrument, providing consistent, predictable and flexible support for the period 2024-2027.

"The Ukraine Facility will allow us to channel consistent and predictable support to Ukraine to help its people rebuild their country in the midst of the unprecedented challenges brought by Russia’s war of aggression.

At the same time the support will help Ukraine take forward the reforms and modernisation efforts needed for it to advance on its path towards future EU membership."

The structure of the programme for Ukraine will consist of three pillars:

Pillar I: The Ukrainian government will prepare a "Ukraine Plan", which will set out its intentions for the recovery, rebuilding and modernisation of the country, as well as the reforms it plans to implement as part of the EU accession process.

Pillar II: Under the investment programme, the EU will provide support in the form of budgetary guarantees and a combination of grants and loans from public and private institutions.

Pillar III: Accession assistance and other support measures to help Ukraine adapt to EU legislation and implement structural reforms on the road to future membership.

Ukraine may request, under the Ukraine Plan, an advance payment of up to 7% of the programme amount.

A precondition for supporting Ukraine under the fund will be that Ukraine maintains and respects effective democratic mechanisms, including a multi-party parliamentary system and the rule of law, and guarantees respect for human rights, including those of individuals belonging to minorities.

In order to assess the implementation of the plan, the regulation will foresee a system of indicators to enable easy tracking of progress in the implementation of various qualitative and quantitative steps, including a review of the social, economic and environmental elements of the Ukraine Plan.

The provisional agreement is subject to approval by the EU Council and the European Parliament before the text can be formally adopted. Once approved, it will be published in the EU's Official Journal and enter into force the following day. The Regulation will apply immediately after its entry into force.

On Thursday, 1 February, EU leaders overcame Hungary's long-standing resistance and reached an agreement on a €50 billion macro-financial assistance programme for Ukraine. The programme will last for four years.

The summit's conclusions state that Ukraine will be able to receive funds if it meets a number of preconditions. It also mentions that EU leaders will hold annual debates on the programme, and in two years, they may propose to the European Commission a review of the entire multi-year financial framework.