Ukraine ratifies €90 billion EU loan to boost spending on defence
Ukraine Secures Major EU Financing to Support Defence and Economic Stability
By Olena Harmash
May 28 (Reuters) - Ukraine's parliament ratified a loan agreement with the European Union on Thursday, paving the way for €90 billion in financing and allowing the government to channel record funds to defence and the war with Russia now in its fifth year.
Immediately after the vote, President Volodymyr Zelenskiy thanked the lawmakers and European partners, saying the funds from the EU would strengthen Ukraine's resilience.
"This was one of the most important votes – one that demonstrates the constructive nature of our joint work and our readiness to hear one another," Zelenskiy said.
"Unity in Ukraine is what always works for Ukraine."
Parliament ratified the loan agreement with the EU with 298 votes, well ahead of the 226 votes required for a majority.
The EU gave its final approval to the €90 billion loan for Ukraine last month after Hungary lifted its veto, ending months of delays and easing pressures on the Ukrainian state budget.
Allocation and Impact of EU Loan
Funds from EU Loan to Go for Defence, Resilience
European Commission President Ursula von der Leyen said the vote paved the way for the first disbursements in June.
The government expects to receive €3.2 billion next month and a total of €45 billion this year. The remaining €45 billion would be kept for 2027.
"The funds will be allocated to national defence and security, strengthening energy resilience and covering the budget deficit," Ukrainian Prime Minister Yulia Svyrydenko said.
"Support from the EU enables Ukraine to maintain macro-financial stability and fulfil its social obligations to its people."
Budget Amendments and Defence Spending
Parliament also gave its preliminary backing to amending the 2026 state budget to reflect a higher level of international financial aid planned for this year.
Under the bill, approved in the first reading, the government would spend €31.8 billion from the EU loan for defence efforts and €13.2 billion to cover the budget gap.
That will allow Ukraine's overall defence spending to rise to a record of about $100 billion this year, up from a previously forecast $64 billion. Defence spending last year was about $61.4 billion.
The EU funding would help reduce the 2026 budget deficit to 12.1% of gross domestic product from 18.5% planned initially.
Conditions and Oversight of EU Loan
Money Conditional on Reforms
Payments from the EU loan are conditional on reforms, and any reversal in the fight against corruption could trigger a temporary suspension in aid.
Conditions are similar to what Ukraine agreed with its other major international lender, the International Monetary Fund.
They include increasing domestic revenues, boosting transparency, and ensuring fair and equal conditions for doing business in Ukraine.
Challenges in Implementing Reforms
Some required measures, like introducing higher taxes for individual entrepreneurs and taxing parcels, are unpopular and would be difficult to get through parliament as lawmakers say they would undermine small businesses and increase the cost of living.
An IMF monitoring mission is currently in Kyiv for the first review of its $8.1 billion lending program.
(Additional reporting by Jekaterīna Golubkova in Tokyo, Anna Pruchnicka in Gdansk; Editing by Aidan Lewis)
