MFA+ Contribution Agreement

11111 THE EUROPEAN COMMISSION AND REPUBLIC OF ESTONIA CONTRIBUTION AGREEMENT PURSUANT TO ARTICLE 7 OF EUROPEAN PARLIAMENT AND COUNCIL REGULATION (EU) 2022/2463  CONTENTS Clause Page 1. CONTRIBUTION 6 2. INFORMATION UNDERTAKTNGS 7 3. INTERPRETATTON IN CONFORMTTY AND PARTIAL INVALIDITY 7 4. EXPTRY DATE 7 5. NOTTCES 8 6. INTERPRETATTON 8 7. LAW AND JURISDICTION 9 8. REVIEW AND EXTENSION 9 9. AMENDMENTS 9 10. ENTRY INTO FORCE 9 -2-  THIS CONTRIBUTION AGREEMENT is between (1) The Republic of Estonia, (“Contributor”); and (2) The European Commission (“the Commission”) Respectively a Party to this agreement. WHEREAS (A) Regulation (EU) 2022/2463 of the European Parliament and of the Council of 14 December 2022 establishing an instrument (the “Instrument”) for providing support to Ukraine for 2023 (macro-financial assistance +)(“Regulation (EU) 2022/2463”) authorises the Commission to make available a Union support to Ukraine in the form ofloans with a maximum amount ofup to EUR 18 000 000 000, non-repayable support and an interest rate subsidy. (B) The Commission and Ukraine signed a Memorandum of Understanding (“MoU”) detailing the conditions for the support on 16 January 2023. (C) The detailed financial terms of the support under the Instrument in the form of loans provided under Regulation (EU) 2022/2463 are laid down in the loan agreement concluded between the Commission and Ukraine on 16 January 2023 (“Loan Agreement”). (D) Regulation (EU) 2022/2463 provides that Ukraine may request each year an interest rate subsidy and coverage of the administrative costs by the Union in respect of the support under the Instrument. The Loan Agreement specifies that, upon request by Ukraine, the European Union may grant such a subsidy (the “Borrowing Costs Subsidy”) covering cost of funding, cost of liquidity management, and cost of service as defined in Commission Implementing Decision (EU, Euratom) 2022/2545 of 19 December 2022 on establishing the framework for allocating costs related to borrowing and debt management operations under the diversified funding strategy’, as amended or replaced as the case may he (the “Cost Allocation Methodology”). (E) Additional support under Regulation (EU) 2022/2463 is to he available for covering the Borrowing Costs Subsidy for the period from 1 January 2023 to 31 December 2027, with the exception ofcosts related to early repayment ofthe loan, in respeet of the loans under the Regulation (EU) 2022/2463 (the “Covered Support”). (F) As provided in the Commission declaration of 9 December 2022 on the contributions by Member States to the interest rate subsidy for the MFA+ loans to Ukraine (the “Declaration”), the contributions shall only cover the interest rate subsidy, namely the cost of funding and cost of liquidity management, and not the administrative costs related to the borrowing and lending operations, namely the cost of service. (G) Regulation (EU) 2022/2463 provides that the Member States of the European Union (together called the “Contributors”) may contribute to the Covered Support, insofar as that is not covered by other resources. To that effect, they have issued on 16 ‘OJ L 328, 22.12.2022, p. 123. -3-  December 2022 a statement on financial support to Ukraine2 whereby they expressed their readiness to enter into contribution agreements with the Commission in accordance with and subject to the completion of the applicable national procedures when the amounts needed cannot be fully or partiaily made available from the Union budget. (H) The Commission committed in its Declaration that it will examine, in the context of the annual budgetary procedure, the availabilities under the Union budget within the limits of available resourees while ensuring the need to maintain sufficient margins and flexibilities to cope with unexpected events in the course of the financial year. This examination shall he conducted with the intention to propose a minimum amount and the results will he reflected in the Commission’s draft annual budget for each year in which the contribution agreements remain in piace. The amounts to he called from Contributors for each given year under each Contribution Agreement wiii he known inter alia upon conclusion of the annual budgetary procedure by the budgetary authority. The Commission will, once amounts to he paid from the Union budget and any remaining amounts to be provided by Member States are known, communicate the amounts to he cailed under each Contribution Agreement to each Contributor. (1) Through their Contribution Agreement, the Contributors shouid irrevocabiy and unconditionaliy undertake to make the contributions available to the Commission on demand by conciuding a contribution agreement with the Commission within the meaning of Articie 22(2) of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Councii of 18 July 2018 on the financiai rules applicabie to the general budget of the Union, amending Reguiations (EU) No 1296/2013, (EU), No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 13 16/2013, (EU) No 223/2014, (EU)No 283/2014, and DecisionNo 541/2014/EU and repeaiing Regulation (EU, Euratom) No 966/201 (“Financial Regulation”). These quaiities of the Contribution Agreement are needed to ensure that the Union is able to fuifil its undertakings to Ukraine to cover the Borrowing Costs Subsidy in fuli, and to establish confidence that ali Contributors are bound by the same elear and unequivocai commitment. Article 7(1), second subparagraph of Regulation (EU) 2022/2463 provides that the contributions by Member States are to become availahle in respect of any amount set in an agreement with the respective Member State after that agreement enters into force. (J) Each Contributor remains fuily and individuaiiy liahle for the commitments that it has made under a Contribution Agreement. In particuiar, the Contributor will not he called upon to compensate for any other Member State’s failure to make its contribution. (K) These contributions are to constitute external assigned revenue in accordance with Article 21(2), point (a)(ii) of the Financiai Reguiation. (L) The Commissions funding strategy, set out in Articie 220a of the Financiai Reguiation (“Diversified Funding Strategy”) applies, in accordance with Artiele 16(1) of Regulation (EU) 2022/2463, to the funding of loan support, provided under that Regulation. The Commission will provide the Contributors with adequate information, based on a written request, to support them to fuifil any nationai legal obligations. 2 Statement of the representatives of the Member States, meeting in the margins of the Permanent Representatives Committee, on financial support to Ukraine, 16 170/22. OJ L 193, 30.7.2018, p. 1. -4- (M) According to Article 7(1) of Regulation (EU) 2022/2463, the GNI key for the contributions by each Contributor in a given year will be based on the GNI contributions of each Contributor to the EU budget for the year before, as per the last adopted annual or amending annual budget. In order to facilitate the preparation of national annual and multiannual budgets for the period covered by this Contribution Agreement, a schedule is attached, indicating the maximum amounts that may he contributed by each Member State. These amounts are based on conservative assumptions regarding interest rates on funds raised. (N) The Commission will communicate by June 2023 to the European Parliament and to the Council the estimated maximum amounts that could he called from Member States in 2024 on the basis of known costs established in respect ofaiready disbursed amounts and conservative assumptions regarding potential costs on remaining amounts under the Loan Agreement. (0) The Commission will communicate in early 2024 without delay the final figures of the expected maximum contributions to the European Parliament and to the Councii, namely once the interest rates on the loans are fully fixed and no longer subject to further change or uncertainty. If the interest rate movements are more unfavourahle than those used to determine the maximum amounts, thereby causing the maximum amounts under this Contribution Agreement to fail short of what may he needed to cover the funding cost of the loans, the Commission will inform without delay the Councii and European Parliament. The Commission may on this basis initiate a review of ali the Contribution Agreements in order to ensure coverage of the revised maximum amount, with each Member State’s amount continuing to he established on the basis of its pro rata share of GNI. Upon conclusion of such review, the organisation and timing for completion of any modifications of Contribution Agreements wili be subject to the reievant national requirements and procedures. (P) For the remaining years covered by this Contribution Agreement, the Commission wiil communicate the amounts to he calied from Contributors inter alia upon conciusion of the annual budgetary procedure by the hudgetary authority for the foiiowing year. While the funding cost of the loans to Ukraine wiii be constant for ali remaining years, the amounts to be called from Contributors can only he communicated once the share of costs to be covered by the Union budget and by the Contributors is known. (Q) The agreement wiii expire on 31 December 2027 uniess otherwise decided by the Parties to this Contribution Agreement. It should he possihle to review the contributions for the case that there be further developments or to renew the contributions from Member States beyond 2027, unless covered through other means in future muitiannual financial frameworks. -5-  CONTRIBUTION 1.1 Contribution The Contributor hereby unconditionally and irrevocably makes available to the Union up to 100 per cent of its contribution to the Covered Support, which will cover the cost of funding and cost of liquidity management and exclude the cost of service (the ?ContributionP) and accordingly undertakes to pay to the Union upon a written demand issued as of 2024 up until the expiry date of this agreement (the “Demand”) the amount requested by the Commission, which shall be up to 100 per cent of its Contribution, in accordance with this Contribution Agreement (the “Demanded Amount’). 1.2 This Contribution Agreement is related to the Loan Agreement that is concluded under Article 16(2) of Regulation (EU) 2022/2463 in accordance with Article 220 of the Financial Regulation and to the costs allocated to disbursements under the Loan Agreement in accordance with the Cost Allocation Methodology. 1.3 The Contribution shall not exceed the value set out in column Amount (EUR)” next to the Contributor’s name in the Schedule attached to this Contribution Agreement. 1.4 Pursuant to Article 7(1) ofRegulation (EU) 2022/2463, the contribution key in a given year shall he based on the GNI contributions of the Contributor to the Union budget for the year before, as per the last adopted annual or amending budget (“Contribution Key”). 1.5 The obligations of the Contributor under this Contribution Agreement and of other Contributors under their respective Contribution Agreements are several on_YO 1.6 The Commission shall determine the Demanded Amount as the share of the Contributor in accordance with the Contribution Key of the invoice under the Loan Agreement established in accordance with the Cost Allocation Methodology, insofar as the invoice is not paid from other resources. 1.7 The Contributor shall transfer the Demanded Amount in accordance with the terms of the Demand in cleared funds to the account referred to in the Demand. The transfer shall occur by the day indicated by the Commission in the Demand (“Transfer Date”). The Transfer Date shall not he earlier than 45 Business Days from the date of the Demand. The Contributor, which fails to honour the Demand, shall remain liable to honour it. 1.8 The Contributor is not entitled to offset or deduct any’ amounts owed to it by the Union from any payments due by the Contributor under this Contribution Agreement. 1.9 If the Contributor fails to pay any sum payable under the Demand on its Transfer Date, the Contributor shall pay in addition default interest on such a sum (or, as the case may he, the amount thereof for the time being due and unpaid) to the Commission from the Transfer Date to the date ofactual payment in fuil, calculated by reference to successive interest periods (each of such length as the Commission may from time to time select, the first period beginning on the relevant Transfer Date and, wherever possihle, the -6-  length of such period shall he that of one week) on such overdue sum at the higher of (a) a rate per annum being the aggregate of (i) 350 basis points, and (ii) the rate applied by the European Central Bank to its principal refinancing operations, or (b) 0 basis points. So long as the failure to pay continues, such rate shail he re-fixed in accordance with the provisions of this paragraph of this Ciause 1.9 on the last day of each such interest period and unpaid interest under this Clause 1.9 concerning previous interest periods shall he added to the amount of interest due at the end of each such interest period. The default interest is immediately due and payable. 1.10 The Contributor undertakes to pay to the Commission ali additional interest and ali costs and expenses, including legal fees, incurred and payable by the Commission as a result of a breach of any obiigation under this Contribution Agreement by the Contributor. 2. INFORMATION UNDERTAKJNGS 2.1 The Commission shali inform the General Secretariat of the Council of the European Union of the signature of the Contrihution Agreement. 2.2 The Commission shall inform Contrihutors on the outstanding claims under the Loan Agreements, including the planned interest and principal payments on an annual basis. 2.3 By the latest of 31 January 2024 the Commission shall notify the Contrihutor the total amounts to he paid in 2024. 2.4 In the remaining years covered by the Contribution Agreement, the Commission shall notify the Contributor of the total amounts to he collected in any given year within 20 business days of the declaration of the annual budget being definitively adopted in accordance with Articie 314(9) TFEU. 2.5 The Commission shall inform Contributors about the receipt of a request for the Borrowing Costs Subsidy from Ukraine. 3. INTERPRETATION IN CONFORMITY AND PARTIAL INVALIDITY Ali provisions hereof shali he interpreted, in case ofdoubt, so that they are in conformity with the governing law. Ifat any time any provision hereof is or becomes illegal, invalid or unenforceable under the governing Iaw, the legality, validity or enforceability of the remaining provisions hereof shall not in any way he affected or impaired thereby. 4. EXPIRY DATE -7  This Contribution Agreement expires on 31 December 2027. 5. NOTICES 5.1 Address for notices Ali notices, demands and other communications to the Contributor hereunder shaii be made in writing (by letter, fax, or e-mail) and shall be sent to the Contributor at: Ministry of Finance, Suur-Ameerika 1, Tallinn 10122, Estonia Fax: +372611 3664 E-mail: [email protected] Attention: State Treasury Department With a copy to: European Commission Fax: [email protected] E-mail: budg-e-back-officeec.europa.eu Attention: BUDG E Back Office or, in relation to the Contributor, to such other address or fax number or for the attention of such other person or department as the Contributor has notified to the Commission in the manner prescribed for the giving ofnotices. 5.2 Effectiveness Every notice, demand or other communication sent in accordance with Ciause 5.1 (Addressfor notices) shail be effective upon actual receipt by the Contributor; provided that any such notice, demand or other communication which wouid otherwise take effect after 4.00 p.m. Luxembourg time on any particular day or on a day which is not a Business Day shali not take effect until 10.00 a.m. Luxembourg time on the immediately succeeding Business Day. 6. INTERPRETATION 6.1 Definitions In this Contribution Agreement with annexes: ‘Business Day’ shaii mean a day on which the TARGET2 payment system is open for business. -8- 6.2 Other agreements Ali references in this Contribution Agreement to an agreement, instrument or other document shall be construed as a reference to that agreement, instrument or other document as the same may be amended, supplemented, restated, extended, replaced or novated from time to time. 7. LAW AND JURISDICTION 7.1 Governing law This Contribution Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by and shali be construed in accordance with European Union law, supplemented if necessary by the Luxembourgish law. 7.2 Exclusive Jurisdiction The Court of Justice of the European Union, in accordance with Article 272 of the Treaty on the Functioning of the European Union, shall have exclusive jurisdiction to settle any dispute (a “Dispute’t), arising out of or in connection with this Contribution Agreement (inciuding a dispute relating to the existence, validity or termination of this Contribution Agreement or any non-contractual obligation arising out of or in connection with this Contribution Agreement) or the consequences of its nuility. 8. REVIEW AND EXTENSION This Contribution Agreement shall be subject to review after 31 December 2023, as a last resort and unless financed from the Union’s budget, in case the final costs of the interest rate subsidy under Regulation (EU) 2022/2463 exceed the amounts foreseen by ali Contribution Agreements. In particular, once the cost of funding from the ioans under the Loan Agreement is definitively established, the Commission shall communicate to Contributors the eventual size of the increased contributions needed to cover excess costs over and above those indicated in the annexed Schedule. This Contribution Agreement shall he subject to review for an extension to provide contributions to the additional support under Regulation (EU) 2022/2463 for covering the interest rate subsidy beyond 31 December 2027, unless that support is covered through other means in future multiannual financial frameworks. 9. AMENDMENTS Any modification to this Contribution Agreement, including the annexed schedule, shall he set out in writing in an amendment signed by the Commission and the Contributor. 10. ENTRY INTO FORCE This Contribution Agreement shall enter into force upon the date of signature by the last -9  Party and, if applicable, subject to the notification by the Contributor that it has met ali the requirements under its constitutional or other laws for the valid assumption of ali its obiigations under the agreement. Ali Ciauses and terms stipuiated herein have been duiy noted and approved by the Republic ofEstonia and the Commission. Done in two originais in the English ianguage, one for the Contributor and for the Commission. by the Republic of Estonia Represented by: Mart Vörklaev Minister of Finance / February 2024 by the European Commission Represented by: Stphanje RISO Director•genera, Dfrectorate.Generai Budget - 10  SCHEDULE MAXIMUM CONTRIBUTIONS PER MEMBER STATE FOR THE PERIOD 2024-2027 Member State GNI key Guaranteed contribution (EUR) Beigium 0.034545093545251 96,726,262 Buigaria 0.004882374366316 13,670,648 Czech Republic 0.017064891897066 47,781,697 Denmark 0.023155641433738 64,835,796 Germany 0.253394975610951 709,505,932 Estonia 0.002103795558836 5,890,628 Ireland 0.022723275588721 63,625,172 Greece 0.0 12847103934769 35,971,891 Spain 0.084842324203730 237,558,508 France 0.171294798888959 479,625,437 Croatia 0.003901507855638 10,924,222 Italy 0.122025596681370 341,671,671 Cyprus 0.001547257669073 4,332,32 1 Latvia 0.002311162075974 6,471,254 Lithuania 0.003776710011764 10,574,788 Luxembourg 0.003706405774364 10,377,936 Hungary 0.010248890252613 28,696,893 Maita 0.000954699517702 2,673,159 Netherlands 0.059194038946719 165,743,309 Austria 0.027911438723363 78,152,028 Poiand 0.041157735014047 115,241,658 Portugal 0.014632349331283 40,970,578 Romania 0.017606907565873 49,299,34 1 Siovenia 0.00363326703 5028 10,173,148 Slovak Republic 0.007079861871162 19,823,613 Finland 0.017188603795393 48,128,091 Sweden 0.036269292850298 101,554,020 EU-27 2,800,000,000 —11 4 11 (‘ REPuBLic OF EsT0NIA MINIsrRv OF FINANcE Stephanie Riso European Commission Our ref./2.2024 No 11-3.1/4’34—4 [email protected] rue Montoyer 15, B-1000, Brussels, I3elgium MFA+ Contribution Agreement Dear Ms Riso, Please find attached the Contribution Agreement concerning the EU’s exceptional macro financial assistance to Ukraine in 2023 (MFA+). Yours sincerely, Martin Pöder Head of International Affairs Department Encl. Contribution Agreement in two copies. Kristiina Abel +372 611 3406 [email protected] Suur-Ameerika 1 / 10122 Tallinn / Estonia 1+372 611 3558 /[email protected] www.rahandusministeerium.ee / Reg. code: 70000272