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Kyiv receives first 4.5 billion euro tranche of EU bridging finance

Meeting of EU-Ukraine Association Council in Brussels

(Reuters) - Ukraine received on Wednesday a first 4.5 billion euro ($4.88 billion) tranche from a European Union bridging finance programme, Prime Minister Denys Shmyhal said.

As the war with Russia enters its third year, Ukraine critically depends on financial aid from its Western partners but foreign financing dwindled in the first two months of this year.

"This strengthens our economic and financial stability," Shmyhal said in a post on the social media platform X.

Ukraine spends most of its own revenues to finance its defence efforts and uses the funds from its Western allies to pay public sector wages and pensions to millions of people and to support other social spending.

Last month the EU approved a four-year 50 billion euro ($54.20 billion) financing programme to Ukraine.

Finance Minister Serhiy Marchenko said the funds would help the government to finance high-priority social and humanitarian needs.

The finance ministry also said the next 1.5 billion euro ($1.63 billion) tranche from the EU was expected in April provided Kyiv met all required conditions for the financing.

The conditions require Ukraine to show progress on key reforms, including managing state finances, fighting corruption and developing the business environment, the ministry said.

The EU aid programme aims to help Ukraine maintain its macroeconomic stability and support the government's efforts to implement economic reforms and develop priority sectors as the war grinds on.

The EU also agreed earlier in March to provide 5 billion euros ($5.42 billion) for military aid to Ukraine as part of a re-vamp of an EU-run assistance fund.

($1 = 0.9226 euros)

(Reporting by Yuliia Dysa and Olena Harmash; Editing by Lucy Marks)