EU to pay Ukraine extra €600m for ARMA law but will impose penalty for delayed reforms
When the European Union pays out the fifth Ukraine Facility tranche of €1.35 billion, it will also pay Ukraine almost €600 million for a reform that was meant to have been completed earlier.
On 4 November, the EU Council will approve the fifth tranche of funding under the Ukraine Facility. EU member state ambassadors in Brussels have adopted a decision to allocate €1.351 billion to Ukraine.
However, according to the draft decision, Ukraine will receive a larger total amount.
The European Commission will simultaneously transfer part of the fourth tranche to the Ukrainian government. In the draft decision, the EU Council notes that Ukraine has satisfactorily met the conditions for the partial disbursement of the fourth and fifth tranches, totalling €1,949,400,399 – €597,494,240 from the fourth tranche and €1,351,906,159 from the fifth.
The payment of nearly €600 million constitutes funding that the EU had promised Ukraine for reforming the Asset Recovery and Management Agency (ARMA).
As European Pravda previously reported, Ukrainian President Volodymyr Zelenskyy signed a law reforming ARMA in July, prompting the resignation of its controversial head, Olena Duma. However, the Ukraine Plan under the Ukraine Facility, which provides EU budget support to Ukraine, required the law to be passed in the first quarter of 2025.
Under EU rules, if reforms under the Ukraine Plan are implemented with a delay of no more than one year, Ukraine can still receive the funds in full.
It should be noted that not all the reforms scheduled for the second quarter of 2025, for which Ukraine will receive €1.351 billion, have been completed. The fifth tranche was originally set at around €2 billion; therefore, the EU will withhold about one-third of this amount until Ukraine catches up on the delayed reforms.
This quarter, Ukraine has been "fined" for failing to complete two reforms: amendments concerning the review and verification of judicial integrity declarations, and the digitalisation of enforcement proceedings. Ukraine has until the end of the second quarter of 2026 to complete these reforms, otherwise the funds allocated will be lost.
The draft EU decision, which has been provisionally endorsed by member states, also states that "Ukraine continues to uphold and respect effective democratic mechanisms, including a multi-party parliamentary system and the rule of law, and to guarantee the observance of human rights, including the rights of persons belonging to minorities", since this remains a fundamental requirement for the continuation of EU funding.
European Pravda has reported, citing a source, that the EU is set to officially approve the fifth tranche of Ukraine Facility funding for Kyiv on 4 November.