Ukraine to repay EUR 90 bln EU loan from Russian reparations

The EUR 90 billion loan to be provided to Ukraine for 2026-2027 is to be repaid by Kyiv using reparations owed by Russia, the EU Council said.

"The amendments to the EU multiannual financial framework regulation adopted today confirm that the loan in support of Ukraine will be financed through EU borrowing on capital markets and backed by an EU budgetary reserve. The loan is to be repaid from reparations owed by Russia to Ukraine," the Council said in a press release.

On the start of disbursements, the EU Council said today’s decision on the last key legislative act underpinning the EU loan agreed by the European Council in December last year will allow the European Commission to begin payments as soon as possible, in the second quarter of 2026.

"The loan will help cover the country’s most pressing budgetary needs and defense industrial capacity needs in 2026 and 2027 within a robust and conditional framework. Funding will be linked to the fulfillment of strict conditions on Ukraine’s part, such as respect for the rule of law, including the fight against corruption," the Council said.

The Council recalled that on February 24 it adopted the regulation establishing the loan in support of Ukraine, as well as a regulation allowing funds to flow through the Ukraine Facility, a dedicated EU instrument for providing stable and predictable financial support to Ukraine. The loan regulation itself was agreed under an enhanced cooperation procedure involving 24 member states, without Hungary, Slovakia and the Czech Republic.

The press release also detailed how funding will be distributed. "The funding will help strengthen European and Ukrainian defense industries. It will be provided in two ways with the following indicative breakdown: EUR 30 billion for macroeconomic support to Ukraine, provided through macro-financial assistance or through the Ukraine Assistance Mechanism. These funds can be used to meet Ukraine’s most pressing budgetary needs. EUR 60 billion for Ukraine’s capacity to invest in defense industrial capabilities, including the procurement of defense products," the Council said.

The funding will give Ukraine "decisive and timely access" to defense products from Ukraine’s, EU, EEA-EFTA and other third countries’ defense industries, the Council said. "These third countries must either conclude a bilateral agreement with the Union in accordance with the SAFE regulation, or demonstrate compliance with certain conditions and commitments. In addition, targeted derogations may apply if Ukraine’s military needs require urgent supply of defense products unavailable in Ukraine, the EU, EEA-EFTA countries or these third countries," the Council said.

Disbursements will be available according to Ukraine’s financing needs as defined by a financing strategy prepared by Ukraine itself.

Following a positive assessment of Ukraine’s strategy, the European Commission on April 1 submitted a proposal for a Council implementing decision approving the positive assessment of Ukraine’s Financing Strategy and granting financial and economic assistance to Ukraine, the press release said.