The EU will pay about €3 billion annually for a loan to Ukraine
The European Union will pay about 3 billion euros in interest annually on the common debt it plans to raise to finance Ukraine, according to senior officials of the European Commission after the decision of the bloc's leaders in Brussels. This is written by The Public with reference to Politico.
On Friday night, heads of state and government agreed to raise €90 billion for 2026 and 2027 under the EU budget guarantee. The funds should prevent Ukraine from facing a funding shortfall starting in April. According to Brussels, in 2026, Ukraine will lack €71.7 billion to cover its military and budgetary needs.
The plan envisages disbursement of €45 billion in 2026 and the remaining amount in 2027. The financing structure is largely the same as the previous €210 billion package. It includes phased tranches, anti-corruption safeguards, and a clear allocation of funds between defence and the state budget of Ukraine.
The debt service will start in 2027 and will cost around €1 billion, with annual interest costs rising to around €3 billion from 2028. These amounts will be covered by the EU's seven-year budget, which is funded mainly by contributions from member states.
The loan is to be repaid by Ukraine only after the war is over and Russia pays reparations. Brussels acknowledges that this scenario seems unlikely in the short term. Therefore, the EU reserves the option of refinancing the debt or using frozen Russian assets. This will require a separate political decision, as some countries, including Belgium, are against such a step.
It was the lack of consensus on the use of Russia's frozen assets that forced EU leaders to move to a shared debt model. At the same time, the Czech Republic, Hungary and Slovakia will not participate in the distribution of the debt burden, but agreed not to block funding for Ukraine. To this end, the European Commission will propose a mechanism of enhanced cooperation for 24 states.
