EU Commission Launches Legal Framework for €90B Ukraine Support Loan

January 15 ------ The European Commission presented a package of legislative proposals designed to secure €90 billion ($105 billion) in financial support for Ukraine in 2026 and 2027, advancing December’s political agreement by EU leaders.

The loan, agreed by the European Council in December, is intended to cover Ukraine’s budgetary and military financing needs as the war with Russia approaches its fifth year and longer-term funding arrangements remain uncertain. The EU Commission published the statements on its website on Jan. 14, according to which roughly two-thirds of the support – about €60 billion ($70 billion) – would be directed toward military assistance, with the remaining €30 billion ($35 billion) allocated as general budget support to help maintain essential state functions and public services. The loan would be raised through common EU borrowing on capital markets and guaranteed by the so-called “headroom” of the EU budget, following the model used for earlier assistance instruments such as the Ukraine Facility and Macro-Financial Assistance programs.

Brussels reiterated that Ukraine would only begin repaying the loan once Russia compensates Kyiv for the damage caused by its full-scale invasion. Until then, Russian sovereign assets immobilized in the EU would remain frozen, with the bloc reserving the right – in line with EU and international law – to use proceeds linked to those assets to service the debt if necessary. The decision relies on the EU’s enhanced cooperation mechanism, allowing a group of member states to move forward when unanimity across the bloc cannot be achieved within a reasonable timeframe. The Commission wrote that the structure would help Ukraine sustain its defense capabilities while also supporting closer integration with Europe’s defense industrial base.

How EU Lawmakers Will Advance Financing for Ukraine

The legislative proposals now move to the European Parliament and the Council of the EU. The Commission said swift adoption is essential if it is to begin disbursing funds in the second quarter of 2026, in line with the timetable agreed by EU leaders.

Once approved, Brussels will adopt implementing decisions and work with Ukrainian authorities to finalize the technical arrangements for the first disbursements. As with previous EU support packages, the assistance will be tied to conditionality requirements, including reforms aimed at strengthening the rule of law and fighting corruption.

The Commission said the €90 billion ($105 billion) package would cover around two thirds of Ukraine’s overall financing needs for 2026–27, based on International Monetary Fund assessments, underscoring the continued importance of coordinated support from G7 partners under initiatives such as the Extraordinary Revenue Acceleration loans program.

Source: kyivpost.com