EU ambassadors agree on €90 billion loan for Ukraine: where will the funds go and under what conditions?
4 February 22:58
The ambassadors of the European Union countries have agreed to provide Ukraine with a long-term loan of €90 billion to finance defense needs and basic budget expenditures in the coming years. The agreement has become critically important amid the risk of an acute shortage of funds as early as this spring. The agreement was announced by the Cyprus Presidency of the EU Council, according to Politico, as reported by "Komersant Ukrainian".
What Ukraine needs €90 billion for
According to preliminary agreements, Ukraine will be able to use about a third of the loan to cover general budget expenditures, including social payments, public sector salaries, and critical expenditures. The rest of the funds will be directed toward defense needs.
Cyprus Finance Minister Makis Keravnos stressed that without this decision, Ukraine could face a financial crisis in the near future.
“This instrument should strengthen Ukraine’s resilience in the face of Russian aggression. Without it, Kyiv risked being left without the funds necessary for defense and negotiations,” Keravnos said.
The loan has not yet been launched: what is needed to get started
Despite political agreement, the launch of the program still requires several formal steps:
- The European Parliament must approve changes to the legislation;
- the conditions for providing funds in tranches must be determined;
- After that, the European Commission will be able to raise funds on international markets under the guarantee of the seven-year EU budget.
Only after these procedures are completed will Ukraine be able to start receiving money.
Disputes in the EU: where to buy weapons
One of the most pressing issues during the negotiations was the procedure for using the defense portion of the loan.
France insisted that a significant portion of the purchases be made from EU manufacturers. The argument was that European taxpayers would spend around €3 billion annually to service the interest on the loan.
At the same time, Germany, the Netherlands, and the Scandinavian countries advocated maximum flexibility for Ukraine, given the real needs of the front.
Compromise: purchases outside the EU are allowed
In the end, the parties reached a compromise. Ukraine will be able to purchase weapons outside the European Union — in particular, in the US and the UK — in cases where:
- there are no equivalent alternatives in the EU, or
- there is an urgent military need.
This applies primarily to:
- air defense and missile defense systems;
- ammunition for fighter jets;
- long-range strike weapons.
Who else can join the program
Countries that are not members of the EU but wish to participate in broader defense contracts will have to contribute financially to cover the interest on the loan.
An exception has been made for Canada, which already participates in joint European defense programs. At the same time, Canada must approve the list of products for Ukraine separately.
When and how Ukraine will repay the loan
Repayment of the loan is only possible if:
- Russia ends its full-scale war;
- reparations are paid to Ukraine.
If this does not happen, the EU allows for the possibility of using frozen Russian assets held in financial institutions in the bloc.
€90 billion is not enough
Despite the unprecedented scale of funding, Brussels acknowledges that these funds will not be enough.
According to estimates by the International Monetary Fund, Ukraine will need at least €135 billion to finance its defense and budget in 2025–2026, even taking into account new IMF loans.
At the same time, the EU and the US are working on a long-term plan to rebuild Ukraine worth up to $800 billion over ten years. However, the implementation of this initiative directly depends on the end of hostilities, the prospects for which remain uncertain at this time.
