2024: The EU will Run out of Money for Ukraine
The European Commission announced that the EU budget's capacity to support Ukraine has been exhausted and new options should be sought to continue it. This happened during the presentation of the draft EU budget for 2024 on Wednesday.
"Following Russia's aggressive war against the country, the EU budget was fully mobilized to support Ukraine and EU member states hosting refugees, but its available funds have been exhausted," it said in a statement, assuring that "the Commission will continue to support Ukraine for as long as necessary."
On June 20, the European Commission is expected to propose changes to the budget framework for 2021-2027, redistributing the funds so that the remainder of the period is financially secured. Unlike national budgets, the European budget cannot run a deficit and the EU only has the pledged funds, which it can supplement with its own revenues.
The shortfall will not affect military aid to Ukraine, as it is financed through the European Peace Mechanism, an extrabudgetary fund fueled by contributions from member states.
Since the start of the war in February 2022, the EU has provided Ukraine with around 53 billion euros in economic and military aid. Together with the resources provided to help Member States meet the needs of Ukrainians fleeing the war in the EU, total support for Ukraine and Ukrainians amounts to around €70 billion.
Recovery plans are getting more expensive
But money for Ukraine is not the only problem in next year's European budget, as rising interest rates have made it significantly more expensive to service the debt the EU takes on to fund its NextGenerationEU pandemic recovery program through the Plans for Recovery and Resilience.
To finance the €807bn program, the European Commission was given permission to raise funds from international markets until 2026, covering borrowing costs from long-term budget ceilings.
"Due to rising interest rates in the markets, the costs of financing the Next Generation EU borrowing operations are significantly higher than originally planned," the European Commission said in a statement.
This will require maximum use of flexibility in the long-term budget. In practice, this means transferring money from one year to another.
How much money is planned for 2024
The commission, which is required to propose a budget, has set spending next year of €189.3 billion (€186.6 billion for 2023) and €113 billion in grant payments under the "Next Generation EU" pandemic recovery program.
It is indicated that priority funding will be directed to six priorities: the green deal, digitization, economy for all, promotion of the European way of life, international commitments and democracy.
The proposed distribution of costs by main policies is:
- 54.9 billion euros for agriculture and fisheries;
- 47.9 billion euros for cohesion policies and regional development;
- 15.8 billion euros for international, humanitarian and pre-accession aid;
- 13.6 billion euros for scientific research and innovation;
- 10.3 billion euros for social cohesion and values, including Erasmus+;
- 4.6 billion euros for strategic investments, mainly in transport, digitization;
- 2.4 billion euros for actions in the field of environment and climate;
- 2.2 billion euros to protect and strengthen the external borders;
- 2.1 billion euros for the EU space program;
- 1.7 billion euros for migration-related costs;
- 1.6 billion euros to address defense challenges.
Read more from the 469th day of the war in Ukraine.
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