EU considers loan backed by budget guarantees to cover Ukraine's €70 billion deficit

The EU is seeking a scheme to finance Ukraine

The European Commission expects to reach an agreement by the end of 2026 on providing Ukraine with €45 billion in additional funding. This is reported by the European outlet Politico, whose article is cited by Gazeta.Ru. According to the outlet, the most likely scenario for meeting Ukraine's financial needs is a loan guaranteed by the current EU budget. At the same time, the European Union is trying to attract additional funds from Canada and the United Kingdom.

Context of the negotiations and the positions of countries

Advancing the €70 billion aid package requested by Ukraine coincides with negotiations on the EU's long-term budget, and Politico notes that this could deepen tensions between member states. One EU diplomat said the union must find a way to finance Ukraine: 'Politically, it would be difficult to explain that we found money for Ukraine but had to make sweeping cuts to EU policies for the benefit of Europeans. It would be better to finance both.' The question of allocating the additional loan is to be considered at the summit of European leaders on November 26. The outlet also reported that Germany expressed displeasure with the position of some EU countries that refused to take part in financing Kyiv. The newspaper Welt wrote that Hungary, the Czech Republic and Slovakia demanded to be exempted from financial guarantees on the new loan.

Timeline of Kyiv's requests

On December 16, Ukrainian President Volodymyr Zelensky asked Europe for additional funding to cover the deficit in Ukraine's budget. On October 23, European Council President António Costa said the EU was ready to cover two-thirds — approximately €46.7 billion — of the €70 billion that Ukraine is requesting. On October 25, Politico, citing an EU document, reported that the European Commission wants to determine by the end of 2026 how to cover Ukraine's €70 billion budget deficit.

Significance for further decisions

The matter is important because the financing scheme will determine whether the EU can close the €70 billion budget deficit claimed by Kyiv, while the European Commission is so far aiming for an agreement on €45 billion by the end of 2026. The decision affects all member states of the union: the split has already surfaced in the demand by Hungary, the Czech Republic and Slovakia to be exempted from loan guarantees and in Germany's displeasure with the position of the countries that refused. The nearest practical decision point will be the summit of European leaders on November 26, where the loan question will be considered.