EU unlocks first €3.2bn of €90bn Ukraine loan package

European Commission President Ursula von der Leyen announced at the Ukraine Recovery Conference in Gdańsk that the European Union has begun disbursing funds under a new €90 billion loan package for Ukraine. The first tranche, worth €3.2 billion in macro-financial assistance, is being directed to covering Ukraine’s budget deficit, preventing the risk of default, and supporting financial stability. She described the decision as “solidarity in action,” saying it demonstrates the EU’s long-term commitment to supporting Ukraine.

In the near future, the European Commission is expected to announce a second tranche of around €6 billion. This will be focused primarily on strengthening Ukraine’s defence capabilities, in particular the production of unmanned aerial systems. Part of the funding may be used to procure components outside the EU, including from China, as Ukraine requires more affordable parts to scale up drone production.

Overall, the EU loan programme provides for phased financing. A total of €45 billion is planned for 2026, of which €16.7 billion will be allocated to civilian and financial support, and €28.3 billion to military needs. The remaining funds are scheduled for 2027 and are expected to cover around two-thirds of Ukraine’s financial requirements, with the remainder to be provided by international partners. The United States is not expected to take part in the financing arrangement.

The EU also emphasises that disbursements are conditional and depend on the continuation of reforms in Ukraine, particularly in the area of anti-corruption. Any backsliding from agreed standards could result in the temporary suspension of funding. It is also noted that the military component of the programme is largely focused on procuring EU-made equipment under the “Made in Europe” policy, although exceptions may be made for critically necessary components.

The financing is being implemented through joint borrowing by 24 EU member states, which are expected to pay around €3 billion in annual interest. Ukraine will be required to repay the loan only if Russia agrees to pay reparations, a scenario widely considered unlikely. The European Commission retains the option of using around €210 billion in frozen assets belonging to the Russian central bank in the absence of such payments.

The launch of the programme follows lengthy political negotiations within the EU, which lasted more than six months due to disagreements among member states over the financing mechanism. Despite delays, the EU has now moved to the stage of actual disbursement, marking a new phase of long-term financial support for Ukraine through to 2027.