Ukraine loan to cost EU €3 billion each year in interest

The European Union will raise €90 billion in common debt over the next two years to fund Ukraine’s defence against Russia, senior EU officials said, with taxpayers set to cover around €3 billion annually in interest.

EU leaders agreed early on December 19 to the plan, backed by the EU budget, after failing to reach a consensus on a proposal to finance Kyiv using frozen Russian assets, Caliber.Az reports, citing foreign media.

The funding is intended to cover a projected €71.7 billion budget gap in Ukraine next year and ensure the country’s war effort continues amid ongoing Russian attacks.

Czechia, Hungary, and Slovakia will not participate in sharing the debt burden but have agreed not to block the financing. The European Commission will next week propose an “enhanced cooperation” mechanism to legally allow the 24 participating member states to issue the joint debt.

The package largely mirrors the previous €210 billion Ukraine financing plan, including staged disbursements, anti-corruption safeguards, and allocations for both military and civilian budget needs. Kyiv is expected to receive €45 billion in 2026, with the remainder scheduled for 2027.

Interest payments on the debt will start in 2027, costing €1 billion that year, and rise to €3 billion annually from 2028 under the EU’s seven-year budget. Ukraine is not required to repay the loan until Russia ends the war and provides reparations, which appears unlikely.

EU leaders could either roll over the debt or eventually tap frozen Russian assets to repay it, a move complicated by Belgian opposition.

Belgium’s resistance, led by Prime Minister Bart De Wever, ultimately forced EU leaders to adopt the common debt route, after Brussels rejected unlimited guarantees for a Russian asset-backed loan.

By Aghakazim Guliyev