The European Union approved this Thursday to give a loan of 90 billion euros to Ukraine, agreed upon by the leaders last December and paralyzed by Hungary for monthswhich should serve to address a third of kyiv’s economic needs for the next two years.
The president of UkraineVolodímir Zelenski; and the leaders of the European Commission and Council, Ursula von der Leyen y Antonio Costahave applauded this Thursday, during a meeting in Nicosia before the start of the informal meeting of EU leaders, the unblocking of the loan and have pointed out “the importance of its fast execution” to help kyiv “meet its urgent budgetary and defense needs.” The next step, the three have agreed, is advance “without delay” in accession negotiations from the Slavic country to the community club.
We analyze how the approved 90 billion loan works and what will finance it:
Last December, after failing attempts to make use of frozen Russian assets To finance aid to Ukraine, EU leaders opted for plan B. That plan consists of using the community budget as a guarantee for issue joint debt and give credit to kyiv. But yes, only 24 of the 27 countries will participate. Hungary, Slovakia and the Czech Republic will not put in a euro.
In total, the European Council committed to giving 90 billion to Ukraine in fragmented payments between 2026 and 2027which will cover a third of their economic needs. that money should ensure the economic viability of kyiv, as long as the rest of the partners take care of the rest.
The Ukrainians They will only have to return the money if Russia does not pay reparations for the damage caused during the war. The leaders also left the door open to make use of the frozen assets so that European citizens are not the ones who pay the bill of a war caused by Vlad’mir Putin.
Of the 90,000 million euros, one third will be in budget support and two thirds in military aid. That is, Ukraine will receive 30,000 million euros to face its “most urgent” economic needs in the civil sphere. And the other 60,000 million euros will be invested in defense. In particular, they must serve to strengthen production capacity of the Ukrainian defense industry.
To make it clear how you will spend the money, The EU and Ukraine agreed on a financing strategy last March. This document will cover half of the loan that will be disbursed throughout 2026. On the other hand, Ukraine must present a support program for the acquisition of defense productsin which you explain what you need and how you want to acquire it.
kyiv must buy equipment and weapons from EU countries, Iceland, Liechtenstein and Norwayand those with whom the bloc has signed security agreements. Also They will be able to purchase products outside that framework, exceptionally, when they are not available in these countries and there is an urgent need.
In this case, the Commission could apply exceptions. In fact, the first has already occurred. Brussels granted an exception to kyiv to drone manufacturing in Ukrainefor which they will use some Chinese components.
According to community sources, the Commission and the Ukrainian government are finalizing the agreement for the loan. This includes rights and responsibilities of the lender and borrower, but also purely practical issues about how the money will be transferred. The final text may require the support of the Ukrainian Parliament.
The parts They are also finalizing a memorandum of understanding which includes issues relating to the management of public finances or the fight against fraud and corruption. Brussels has set itself the goal in any case that The money starts arriving in the second quarter of this year. The same sources suggest that the first disbursement should be ready before the month of June and it would be about 3.7 billion.
The European Council reached an agreement in December last year. Hungary, Slovakia and the Czech Republic gave their support to the mechanism on the condition of not having to pay. In January of this year, the European Commission presented the necessary legislations to translate that political decision into a financial instrument.
One of those decisions, The modification of the community budget requires unanimity. In February, the Hungarian Government decided to veto it, accusing Ukraine of having stopped the supply of Russian oil to Hungary for political reasons. kyiv blamed it on a breakdown in the oil pipeline that crosses the country as a result of a bombing by the Russian army.
The still Hungarian Prime Minister, Viktor Orbánwhich faced difficult elections in April, accused Ukrainian President Volodymyr Zelensky of blackmail. Orbán said Ukraine was endangering Hungary’s energy security and warned he would not support no decision in favor of kyiv as long as the crude oil did not arrive.
On April 12, Orbán lost the elections by a significant margin against the opposition leader, Peter Hungarian. Last week, The Ukrainian government assured that it was fixing the fault. On Tuesday the oil flowed again and on Wednesday, unanimously, the EU gave the green light to the loan.
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