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EU will probably have to give new loan to Ukraine, Estonian PM Michal says - Finance news and analysis from Global Banking & Finance Review
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EU will probably have to give new loan to Ukraine, Estonian PM Michal says

Published by Global Banking & Finance Review

Posted on October 16, 2026

2 min read

· Last updated: October 16, 2026

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Estonian PM: EU Expected to Offer New Loan to Ukraine for 2025 Budget Support

EU Financial Assistance and Ukraine's Budget Gap

By Andrew Gray

Estonian PM's Statement on EU Support

BRUSSELS, Oct 16 (Reuters) - The European Union will probably have to provide a new loan to Ukraine to help cover a budget gap for next year and keep up Kyiv's fight against Russia's invasion, Estonian Prime Minister Kristen Michal told Reuters in an interview on Friday.

"European financial assistance has to be there," Michal said before the start of the second day of an EU summit in Brussels. "Financial assistance in the war of attrition is the alpha and omega. You have to keep it up... That has to come from the European Union."

Background: Previous EU Loans and Ukraine's Financial Needs

EU leaders agreed in December last year to provide a €90 billion ($101 billion) loan to Ukraine to cover much of its financial needs for 2026 and 2027. But Kyiv has said it now faces a gap of more than $70 billion for defence and regular budget spending next year.

Debate Over Using Frozen Russian Assets

Some European governments have pushed to fund Ukraine by using Russian assets frozen in the EU but that idea has been blocked by Belgium, where most of the assets are held, and several other EU nations.

Prospects for a New EU Loan

Michal said another EU loan was the probable solution this time around too. "This is the mechanism that Europe has used many times so for Europe it's a quite understandable mechanism," he said.

Timeline for Additional Funding Decisions

Michal said he hoped EU leaders could decide on additional funding for Ukraine for 2027 before the end of this year, ahead of a year of elections in many European countries.

Funding Mechanisms for the Loan

To fund the €90 billion loan, the EU is borrowing money against its common budget. Asked how another loan would be funded, Michal replied: "We will find a way because Europe usually finds a way. You get to the darkest hour and then you find a way." ($1 = 0.8894 euros)

(Reporting by Andrew Gray, Additional reporting by Olena Harmash; Editing by Charlotte Van Campenhout and Alex Richardson)

Key Takeaways

  • EU previously agreed a €90 billion loan for Ukraine covering 2026–2027, raised via EU borrowing backed by its budget framework (consilium.europa.eu).
  • Ukraine still faces a substantial external financing gap for next year—estimates range from around $32.6 billion to more than $50 billion—despite existing commitments (kmu.gov.ua).
  • Using frozen Russian assets to fund Ukraine remains politically and legally contentious, with Belgium blocking proposals despite holding an estimated €210 billion in frozen central bank assets across Europe (lemonde.fr).

References

Frequently Asked Questions

Why does Ukraine need another EU loan?
Ukraine faces a budget gap exceeding $70 billion for defense and regular spending next year, necessitating further financial aid from the EU.
How has the EU previously assisted Ukraine?
The EU agreed to a €90 billion loan in December last year to support Ukraine’s financial needs for 2026 and 2027.
What is blocking the use of Russian assets to fund Ukraine?
Belgium and several other EU nations have blocked the proposal to use frozen Russian assets held within the EU to fund Ukraine.
When could EU leaders decide on additional funding?
Estonian PM Kristen Michal hopes EU leaders will decide on new funding for Ukraine for 2027 before the end of this year.
How does the EU fund large loans to Ukraine?
The EU borrows money against its common budget to fund large-scale loans to Ukraine.

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