EU Approves Landmark €90 Billion Joint-Debt Loan for Ukraine

European Union member states have sealed a major financing package worth €90 billion to support Ukraine’s budgetary and military needs through 2026–2027. The agreement, reached by EU ambassadors after intensive negotiations, will be funded through joint EU debt, with the EU budget serving as the guarantee for investors.

The package is designed to prevent a sharp drop-off in foreign aid that Kyiv had warned could occur as early as April. The first tranche is expected to be released in early April, pending fast‑tracked approval by the European Parliament.

Breakdown of the €90 Billion Package

• €30 billion in budgetary support to keep essential government functions running.
• €60 billion in military assistance, including weapons, ammunition, and defence systems.

The balance between these pillars may be adjusted if the war ends before the programme concludes.

Procurement Rules and “Cascading Principle”

A key point of contention—military procurement—was resolved through a “cascading principle”:

• Priority purchases must be made within Ukraine, the EU, or associated European states (Iceland, Liechtenstein, Norway, Switzerland).
• If equipment is unavailable, Ukraine may turn to third‑country suppliers, including the United States.
• Countries with EU security partnerships—such as the UK, Japan, South Korea, and Canada—may participate if they contribute a “fair and proportionate” share of borrowing costs.

France had pushed for strict “Made in Europe” rules, while Germany, the Netherlands, and Nordic states advocated for greater flexibility. The final compromise allows Ukraine to access non‑EU markets when necessary.

Member State Exemptions

Three countries—Hungary, Slovakia, and the Czech Republic—will be fully exempt from financial obligations, including annual interest payments. These states had previously opposed additional aid to Kyiv.

Conditions and Oversight

The loan will be disbursed gradually and tied to strict governance conditions:

• Any backsliding on anti‑corruption reforms in Ukraine will trigger a suspension of payments.
• Ukraine will only be required to repay the loan if Russia ends its war and agrees to compensate Ukraine for damages—an outcome Moscow has rejected. As a result, the EU is expected to roll over the debt indefinitely.

Political and Strategic Significance

EU officials framed the agreement as a decisive show of unity and long‑term commitment to Ukraine’s sovereignty.

“The new financing will help ensure the country’s fierce resilience in the face of Russian aggression,”
— Makis Keravnos, Cypriot Finance Minister.

The deal also reflects a broader geopolitical shift, including closer cooperation between Brussels and London, with EU officials emphasising the strategic importance of UK involvement in Ukraine’s defence procurement framework.

Next Steps

The European Parliament will hold an extraordinary plenary session on 24 February, marking the fourth anniversary of Russia’s invasion, during which MEPs are expected to approve the loan. The approval is considered highly likely given broad political support.

If approved, the EU aims to release the first tranche in early April, aligning with Kyiv’s request to avoid a funding cliff.