EU approves landmark EUR90bn loan for Ukraine

The EU has approved a EUR90 billion support loan for Ukraine covering the 2026 – 2027 period, following months of delays. 

Under plans drawn up in December and approved by the EU Parliament in February, EUR60 billion of the loan is earmarked for defence purposes, while the remaining EUR30 billion will be allocated to broader financial aid. 

The loan received ‘preliminary’ approval on 22 April and was formally adopted by the European Council on 23 April. 

The loan is seen by many as an economic lifeline for Ukraine, with the country’s Deputy Prime Minister Taras Kachka calling it “a matter of life or death”. 

In February, Hungary’s outgoing President, Viktor Orbán, had exercised his veto over the loan. This was after damage to the Druzhba pipeline, which transports Russian oil through Ukraine to Hungary and Slovakia. Ukrainian President Volodymyr Zelenskyy confirmed on 21 April that the pipeline had been repaired, paving the way for Hungary to lift its veto.  

In total, the EU loan is expected to cover a significant portion of Ukraine’s financing needs over the two-year period; however, it is estimated that the country will require a further EUR45 billion in finance from non-EU backers, such as Australia, Canada, Norway, and the UK. 

This will help fund vital equipment, such as interceptor missiles and advanced air defence systems to protect Ukraine’s airspace. In March, Russia launched its largest drone assault on Ukraine over a 24-hour period.  

How will the loan work? 

According to the EU Parliament, the loan will be financed through EU borrowing from capital markets and guaranteed by the “headroom” of the EU long-term budget.  

Headroom refers to the difference between the EU’s actual expenditure and the amount it is allowed to spend. 

Ukraine itself will only be liable for the “repayment of the principal of the loan once it receives war reparations from Russia”, the plans state.