site.btaCouncil of EU Takes Another Step to Secure Loan for Ukraine

The Council on Wednesday agreed its position on the legal framework implementing the European Council agreement to provide a EUR 90 billion loan to Ukraine for the years 2026-2027. The Council aims for a speedy agreement with the European Parliament to allow the first payment to be disbursed early in the second quarter of this year, according to a press release.

At the end of January, the European Parliament voted in favor of accelerated negotiations between the European institutions to secure the loan. In December last year, the European Council decided that the loan would be raised on international financial markets and would be covered only by EU Member States that wish to participate.

The Ukraine support loan will help Ukraine address its urgent financing needs as Russia continues its war of aggression. To that end, it will specifically aim to support Ukraine’s general budget and defence needs.

The loan will be financed through EU borrowing on the capital markets and will be backed by the EU budget. The loans will become repayable only once Russia has paid war reparations to Ukraine.  Furthermore, the financing will help strengthen the European and Ukrainian defence industries.

Wednesday’s decision was taken through the enhanced cooperation procedure with the participation of 24 member states.

Under the proposed framework, the EU will make funding available to Ukraine in two ways: EUR 30 billion will be provided as macroeconomic support to Ukraine, channelled via macro-financial assistance (MFA) or implemented through the Ukraine Facility, the EU’s dedicated instrument for providing Ukraine with stable and predictable financial support. EUR 60 billion will be used to support Ukraine’s capacity to invest in defence industrial capacities and to procure military equipment. The funding will give Ukraine crucial and timely access to defence products from both the Ukrainian and EU defence industries.

The financial and economic assistance available under the loans will be made accessible in line with Ukraine’s financing needs, determined by a financing strategy to be prepared by Ukraine itself. The Council will need to approve this strategy following a Commission assessment.

In all cases, funding will be linked to strict conditions on Ukraine’s side such as adherence to the rule of law, including the fight against corruption.

Defence products should in principle only be procured from companies in the EU, Ukraine, or EEA-EFTA countries. This will not have an impact on the budget contributions of Czechia, Hungary and Slovakia, who have chosen not to take part in the enhanced cooperation.

The Council will now seek a speedy agreement with the Parliament on the final legal texts of the regulation implementing the support loan and the regulation amending the Ukraine Facility.

The Council is also now expected to request, via written procedure, the consent of the European Parliament on an amendment to the current MFF regulation to guarantee the financial assistance under the EU budget.

Once all steps are complete, the Commission will be able to disburse the first payment early in the second quarter of this year.

According to preliminary projections of the IMF, the total estimated remaining funding needs of Ukraine for the period 2026-2027 amount to EUR 135.7 billion, under the assumption that Russia’s war of aggression will end in 2026.

Since the start of Russia's military aggression, the EU and its member states have provided EUR 193.3 billion in assistance to Ukraine.