EU Parliament Approves €90B Ukraine Support Loan

February 12 ------ The European Parliament approved a €90 billion ($108 billion) Ukraine Support Loan to assist the state as Russia’s full-scale invasion enters its fifth year. The loan is designed to provide predictable financing for the 2026 and 2027 fiscal years, covering roughly two-thirds of the country’s estimated financial needs.

The proposal was approved under an urgent procedure to ensure the rapid provision of aid. While the parliament has given its support, the decision still requires formal adoption by the Council of the European Union.

Of the €90 billion, €30 billion ($36 billion) will be available for macro-financial assistance or budget support through the EU`s support program Ukraine Facility, according to the EU Parliament`s publication. The remaining €60 billion ($72 billion) is allocated to strengthen defense capabilities and support the procurement of military equipment. These products will be sourced from Ukrainian, EU, and European Economic Area (EEA)/EFTA defense industries.

Following the Council’s approval and the publication of the acts, the European Commission should then initiate borrowing on the markets and sign the necessary agreements with Ukraine. The commission expects to disburse the first payment in the second quarter of 2026.

Loan structure and conditions

Ukraine Support Loan will be financed through common EU borrowing from capital markets and guaranteed by the “headroom” of the EU long-term budget. Debt-servicing costs, estimated by the Commission at €1 billion ($1.2 billion) for 2027 and €3 billion ($3.6 billion) per year from 2028, will be covered by EU annual budgets. Ukraine will be liable for repayment of the principal only after it receives war reparations from Russia. All funding is subject to strict conditions – Ukraine must maintain its commitment to democratic governance, the rule of law, and the protection of human rights. This includes ongoing efforts to combat corruption and strengthen democratic institutions.

Since Czechia, Hungary, and Slovakia opted out of backing the loan, the agreement was taken under the “enhanced cooperation procedure.” This allows willing EU member states to collaborate without requiring total unanimity.

According to International Monetary Fund (IMF) forecasts, Ukraine’s financing needs for 2026-27 amount to €135.7 billion ($163 billion), assuming that the war ends in 2026. The Ministry of Finance told Kyiv Post that the government needs $74.8 billion just to cover budget needs during this period; currently, $37.4 billion remains uncovered.

In an interview with Kyiv Post, IMF Managing Director Kristalina Georgieva noted that this gap is expected to be covered by partner commitments. She talked about the importance of maintaining security funding while continuing reforms in governance and the fight against corruption to maintain donor confidence.

Source: kyivpost.com