KYIV, Ukraine — Cash-strapped Ukraine, locked in its second major year of defensive war against Russian invasion, has secured a landmark 90 billion-euro ($106 billion) multi-year loan from the European Union, a financial lifeline that will keep the country’s core state functions and wartime military operations running through 2027.
The massive financial package received formal unanimous approval from EU member states on Thursday, marking the end of a months-long political deadlock that nearly left Kyiv facing catastrophic resource shortages as early as this spring. The final green light came just days after Ukrainian President Volodymyr Zelenskyy confirmed full repairs to the Ukrainian segment of the Druzhba oil pipeline, with oil transit resuming to landlocked Slovakia and Hungary — a key precondition Budapest and Bratislava had tied to the release of the funds.
Negotiations over the package had stalled for months due to internal political friction within the 27-nation bloc, most notably staunch opposition from outgoing Hungarian Prime Minister Viktor Orbán, a longstanding Kremlin ally within the EU. Orbán’s electoral defeat earlier this month removed the single biggest barrier to progress, clearing the path for final negotiations to resume and reach a successful conclusion.
### The Urgent Rationale for the Package
The timing of the approved loan could not be more critical for Kyiv. The International Monetary Fund projects that Ukraine will face a total financing gap of approximately 136 billion euros ($158 billion) over the 2026–2027 period, as the country’s tax base remains gutted by war and most of its export infrastructure remains blocked by Russian naval forces. The EU loan is expected to cover around two-thirds of this total shortfall. Without the funding, senior Ukrainian and EU officials warned that Kyiv could have exhausted the resources needed to keep basic public services running and sustain frontline military operations as early as the coming spring.
Funding will be disbursed in two equal installments: 45 billion euros ($53 billion) will be made available for the remainder of 2026, with an equal 45 billion euros allocated for the full 2027 calendar year. Under the terms of the agreement, roughly one-third of the total package will go toward stabilizing Ukraine’s national budget to fund pensions, public sector salaries, healthcare and other core government services. The remaining two-thirds will be directed to defense priorities, including the procurement of foreign weapons systems and the expansion of Ukraine’s domestic arms manufacturing capacity. The first disbursement of funds is expected to reach Kyiv within the next several months.
### What Caused the Months-Long Delay
EU leaders initially reached a political agreement on the loan framework back in December 2025, but implementation was put on hold amid a bitter dispute over the Druzhba oil pipeline. In a compromise reached that same month, the Czech Republic, Hungary and Slovakia had agreed not to block the EU from raising the full amount on global capital markets, on the condition that the three countries would not be required to contribute any financial guarantees to the package.
The dispute escalated in late January, when the Ukrainian segment of the Druzhba network — which carries Russian crude oil to refineries in Slovakia and Hungary — was knocked offline after an alleged Russian drone attack. Both the Hungarian and Slovakian governments publicly accused Ukraine of deliberately cutting off oil supplies to pressure their leaders, turning a technical infrastructure issue into a broader political standoff within the bloc and holding up the loan approval.
The impasse was only broken earlier this week, when Hungary and Slovakia confirmed that Ukraine had fully restored oil transit through the pipeline. Zelenskyy’s announcement that all repair work was complete removed the final outstanding barrier to the deal. Thursday’s formal vote, which unanimously approved adjustments to the EU’s 10-year long-term budget to accommodate the new spending, was the final procedural step required to release the package.
### Repayment Terms Tied to Russian War Reparations
In a departure from earlier proposals that would have used billions in frozen Russian central bank assets to back the loan, EU leaders agreed to a more cautious framework that will tie Ukraine’s repayment obligation directly to future war compensation from Moscow. Under the new terms, Ukraine will not be required to begin repaying the loan until after Russia formally compensates Ukraine for the massive physical and economic damage caused by its full-scale invasion.
EU leaders opted against mobilizing frozen Russian assets to back the loan after widespread concerns over potential Russian retaliation against European financial institutions and complex international legal challenges that could block the seizure of the assets. The bloc has opted to keep the estimated $300 billion in Russian central bank assets frozen until Moscow agrees to end its invasion and pay full reparations for the damage inflicted on Ukraine.