Finance
Explainer-How Will the EU's 90 Billion Euro Loan to Ukraine Work
Published by Global Banking & Finance Review®
Posted on April 22, 2026
3 min readLast updated: April 22, 2026
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The EU plans a €90 billion loan to Ukraine in 2026–2027, funded via joint borrowing backed by EU budget “headroom.” Hungary’s recent parliamentary defeat and repairs to the Druzhba pipeline have removed major political obstacles.
Explained: How the EU's 90 Billion Euro Ukraine Loan Will Work and Be Repaid
EU's 90 Billion Euro Loan to Ukraine: Structure, Repayment, and Challenges
BRUSSELS, April 22 (Reuters) - A 90 billion euro ($105 billion) EU loan for Ukraine, blocked by Hungary under outgoing Prime Minister Viktor Orban, could be revived following Orban's defeat in an election this month and a resumption of Russian oil deliveries to Hungary over Ukraine.
European Union leaders had decided last December to jointly borrow the money to lend to Ukraine to fund its defence against Russia for this year and next, using frozen Russian funds as a potential backstop to ensure that Moscow ultimately pays.
How Will Europe Lend Ukraine the Money?
The EU will provide interest-free loans for the years 2026-2027 based on EU borrowing on capital markets backed by the EU budget headroom, which is the difference between the maximum amount the EU can ask EU members to contribute and the amount it needs to cover foreseen expenses.
Hungary, Slovakia and the Czech Republic, with governments seen as closer to Moscow, secured exemptions that mean they will not participate in the joint borrowing.
Repayment
Who Will Repay and How?
Ukraine is not expected to pay the money back from its own funds, with the capital only due for repayment once Russia pays war reparations after the conflict is over.
Role of Frozen Russian Assets
Russia has central bank assets that are frozen in the EU which are worth around 210 billion euros and which could be used for the repayment.
The scheme was designed to effectively make use of the frozen Russian funds to help Ukraine without confiscating the money, a step that had been rejected as legally risky.
What Will It Cover?
Allocation of Funds
The 90 billion euros is to cover two-thirds of Ukraine's needs for the next two years, estimated at 135 billion euros in total. Of the total, Ukraine will get 45 billion euros in 2026 and another 45 billion in 2027.
Military and Budget Needs
Each year, 28 billion euros will be for spending on military needs and 17 billion on general budget needs.
Brussels expects other developed countries sympathetic to Ukraine to provide the rest of the funding, which has already been promised for 2026.
What Were the Hurdles?
Political and Logistical Challenges
The idea of joint EU borrowing against the EU budget seemed initially impossible as it required unanimity and faced opposition from Orban.
Hungary, Slovakia and the Czech Republic agreed to let the scheme go ahead after EU leaders agreed it would not impact them financially.
Hungary's Blockade and Resolution
Hungary later blocked the loans after it stopped receiving Russian oil via the Druzhba pipeline across Ukraine's territory. Kyiv says the pipeline was shut as a result of damage from a Russian strike.
Prospects for unblocking the loan brightened when Orban lost an election on April 12 and the incoming prime minister Peter Magyar said he would not oppose the disbursements. Also, the Druzhba pipeline has been repaired by the Ukrainians and oil is about to start flowing.
(Writing by Jan StrupczewskiEditing by Peter Graff)
Key Takeaways
- •The €90 billion support loan is structured as €60 billion for defence and €30 billion for general budget support, to be repaid only once Russia pays reparations and using frozen Russian assets as a legal backstop (enlargement.ec.europa.eu)
- •The loan is financed through EU bond issuance secured by budget headroom, with opt‑outs for Hungary, Slovakia and Czechia under enhanced cooperation, and repayments effectively deferred until Russia compensates Ukraine (euronews.com)
- •Political blockage by Hungary under Orban, tied to the Druzhba pipeline stoppage, has eased after Orban’s April 12 election loss and Ukraine’s repair of the pipeline, paving the way for imminent approval and disbursement (apnews.com)
References
Frequently Asked Questions about Explainer-How will the EU's 90 billion euro loan to Ukraine work
1How will the EU provide the 90 billion euro loan to Ukraine?
The EU will jointly borrow money on capital markets, backed by the EU budget, to provide interest-free loans to Ukraine in 2026 and 2027.
2Will Ukraine have to repay the EU loan from its own funds?
No, repayment is expected only after Russia pays war reparations, using frozen Russian central bank assets as a backstop for repayment.
3What expenses will the EU loan cover for Ukraine?
The loan will cover two-thirds of Ukraine's estimated 135 billion euro needs over two years, including military and general budget expenses.
4Why was the EU loan to Ukraine delayed?
Hungary blocked the loan due to political opposition and a halt of Russian oil deliveries, but recent political changes and pipeline repairs have removed obstacles.
5What is the role of frozen Russian assets in this loan scheme?
Frozen Russian central bank assets in the EU serve as a backstop, with the aim that Russia ultimately pays for the repayment through war reparations.
