(Bloomberg) -- Ukraine’s economy will plunge by almost a third this year as the Russian invasion drags on, the European Bank for Reconstruction and Development said in a report forecasting a steeper decline than the 20% contraction it predicted in March. 

The European Union is considering the issuance of joint debt to finance the country’s long-term reconstruction, which may end up costing hundreds of billions of euros, according to an EU official familiar with the plan. 

U.S. President Joe Biden signed into law a measure making it easier for Washington to send weapons and supplies to the government in Kyiv, while Congressional Democrats drafted a Ukraine aid package worth almost $40 billion, more than the $33 billion Biden requested from lawmakers last month. 

(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)

Key Developments

  • Biden Signs Lend-Lease Act to Speed Weapons Delivery to Ukraine
  • Draghi Has Started Unpicking Decades of Italian Ties to Russia
  • Biden Team Sees Tilt to China Buoyed as Putin Falters in Ukraine
  • Germany Comes to Grips With Its Hard-Power Role in Europe
  • Ukraine Bomb Shelters Help Parts Maker Keep VW and BMW Supplied

All times CET: 

Ukraine’s Economy to Shrink 30% This Year: EBRD (7:10 a.m.)

That forecast is more than previously expected and in a scenario where the war ends this year, the EBRD said. 

Russia’s invasion has upended trade in energy, agricultural commodities and fertilizers and disrupted supply chains, resulting in slower growth across eastern Europe.

EU Eyes Joint Debt to Fund Ukraine Reconstruction (7:01 a.m.)

The long-term reconstruction could cost hundreds of billions of euros, according to an official familiar with the plan.

The bloc is also weighing using loans, guaranteed by member states, to provide urgent funds to Ukraine, which says it needs as much as $7 billion a month to fill a budget gap, said the official. The European Commission will present a package addressing Ukraine’s financial needs on May 18.

Draghi Has Started Unpicking Decades of Italian Ties to Russia (6:52 a.m.)

Less than a week before Russia invaded Ukraine, Italian Prime Minister Mario Draghi was planning a trip to Moscow and discussing a possible increase in gas supplies with Russian President Vladimir Putin. His approach is very different now.

What changed Draghi’s thinking was the increasing brutality of the war. He was particularly horrified by images of alleged war crimes in Bucha and other areas occupied by Russian troops, according to a person familiar with his thinking. Draghi is set to meet Biden at the White House Tuesday.

Oil Extends Slump as EU Softens Sanctions Plan (4:11 a.m.)

Oil extended its biggest drop in more than five weeks as the EU softened its proposed sanctions on Russian crude exports and economic growth concerns weighed on sentiment across markets.

West Texas Intermediate futures fell toward $101 a barrel in Asian trading after sliding around 6% on Monday. The bloc will scrap a proposed ban on EU-owned vessels transporting Russian crude after objections from members including Greece. Talks on a sixth package of sanctions are continuing.

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