EU Grants Ukraine €90 Billion Loan to Cover War Costs

Ukraine Support Loan – 2026‑2027

• Goal
  The EU will give Ukraine a loan of up to €90 billion to help it meet the huge costs caused by Russia’s war. The loan will be paid back only when Ukraine receives war‑reparations from Russia (cash or other assets, not territory).

• Why it is needed

• Russia invaded Ukraine on 24 Feb 2022, destroying infrastructure and hurting the economy.
• Ukraine’s debt is now about 85 % of GDP (over 100 % if all loans are counted).
• The 2026‑2027 budget forecast shows Ukraine needs €43 billion in aid, but only €25 billion has been secured.
• The IMF has asked for a new programme to cover 2026‑2029, but it needs guarantees from partners, including the EU.

• How the loan works

• The EU will borrow on the capital markets and back the loan with its budget headroom.
• The loan is a limited‑recourse instrument: it becomes due only after reparations are received.
• The EU will also cover the loan’s borrowing costs (interest, administration) through a special budget line.

• Who pays

• The loan is financed by the EU, but the cost of borrowing is shared by the participating Member States (those that agreed to the enhanced cooperation).
• The loan will be paid back from the proceeds of Russian reparations; if those are not yet available, the EU may use immobilised Russian central‑bank assets to repay.

• Conditions for Ukraine

• Ukraine must keep a functioning democracy, rule of law, and fight corruption.
• Ukraine must submit a yearly “Financing Strategy” showing its needs and how it will use the money.
• The EU will review the strategy quickly and decide how much aid to release.
• The loan can be split into several tranches, but all must be paid back by 31 Dec 2028.

• Support for defence industry

• Part of the loan will help Ukraine build and modernise its defence industry, making it easier to produce weapons and integrate with European defence suppliers.
• Projects must meet EU security rules and avoid reliance on third‑country suppliers that could restrict Ukraine’s defence choices.

• Monitoring and reporting

• Ukraine will report monthly on how funds are spent.
• The EU will keep a special account for defence‑industry payments and will audit all contracts.
• The European Parliament and Council will receive annual reports and a final evaluation in 2029.

• Budget impact

• The €90 billion loan is financed through EU borrowing; the EU will cover the debt‑service costs with a new special instrument.
• No extra money is taken from the regular EU budget; the loan is paid back from reparations or Russian assets.

• Timeline

• The regulation will enter into force the day after it is published.
• The loan will be available from 1 Jan 2026 and fully disbursed by 31 Dec 2028.
• The loan will be reviewed each year and can be reduced or cancelled if Ukraine’s needs drop or if reparations are paid earlier.

In short, the EU is creating a €90 billion loan for Ukraine that will be repaid only when Russia pays reparations, with strict conditions on democracy, anti‑corruption, and defence‑industry support, and with a clear monitoring and reporting framework.