Ukraine ratifies €90 billion EU loan to boost spending on defence
By Olena Harmash
May 28 (Reuters) – Ukraine’s parliament approved a loan agreement with the European Union on Thursday, paving the way for 90 billion euros in financing and allowing the government to pour record amounts of funds into defense and the war with Russia in its fifth year.
Immediately after the vote, President Volodymyr Zelenskiy thanked MPs and European partners, saying that funds from the EU would strengthen Ukraine’s resilience.
“This was one of the most important votes that showed the constructive nature of our joint work and our readiness to listen to each other,” Zelenskiy said.
“Unity in Ukraine is what has always worked for Ukraine.”
Parliament approved the loan agreement with the EU with 298 votes, well before the 226 votes needed for a majority.
The EU gave final approval to a 90 billion euro loan to Ukraine last month after Hungary lifted its veto, ending months of delays and easing pressure on the Ukrainian state budget.
FUNDS TO BE USED FROM EU LOAN FOR DEFENSE AND RESILIENCE
European Commission President Ursula von der Leyen said the vote paved the way for the first payments in June.
The government expects to receive €3.2 billion next month, for a total of €45 billion this year. The remaining 45 billion Euros will be kept until 2027.
“The funds will be allocated to national defense and security, strengthen energy resilience and close the budget deficit,” said Ukrainian Prime Minister Yulia Svyrydenko.
“Support from the EU allows Ukraine to maintain macro-financial stability and fulfill its social obligations to its people.”
Parliament also gave preliminary support to amending the 2026 state budget to reflect the higher level of international financial aid planned for this year.
According to the bill approved in the first reading, the government will spend 31.8 billion euros from the EU loan for defense works and 13.2 billion euros to close the budget deficit.
This will allow Ukraine’s overall defense spending to rise to a record high of nearly $100 billion this year, up from a previously estimated $64 billion. Defense spending last year was approximately $61.4 billion.
EU funding will help reduce the 2026 budget deficit to 12.1% of gross domestic product from the originally planned 18.5%.
CONDITIONAL MONEY FOR REFORMS
Payments from the EU loan are contingent on reforms and any backtracking in the fight against corruption could trigger a temporary suspension of aid.
The terms are similar to Ukraine’s agreement with its other major international lender, the International Monetary Fund.
These include increasing domestic revenues, increasing transparency, and ensuring fair and equal conditions for doing business in Ukraine.
Some necessary measures, such as higher taxes for individual entrepreneurs and taxing parcels of land, are unpopular and will be difficult to pass through parliament because lawmakers say they would undermine small businesses and raise the cost of living.
The IMF monitoring mission is currently in Kiev for the initial review of the $8.1 billion loan program.
(Additional reporting by Jekaterīna Golubkova in Tokyo, Anna Pruchnicka in Gdansk; Editing by Aidan Lewis)
