Unprecedented loan. The European Parliament approves up to €35 billion loan to Ukraine

The European Parliament has supported the European Commission’s proposal to provide Ukraine with an exceptional loan of up to €35 billion as a contribution to the G7 initiative  with subsequent repayment using future income generated from immobilised Russian assets.

635 deputies participated in the vote, with 518 in favour, 56 against, and 61 abstaining, Interfax-Ukraine reported. 

This exceptional loan represents the EU’s contribution to the G7 initiative to provide Ukraine with up to $50 billion (€45 billion) in financial assistance to meet urgent financial needs in the face of a brutal aggressive war by the Russian Federation. The repayment of this exceptional loan and loans from other G7 countries will be carried out at the expense of extraordinary income received from immobilised assets of the Russian Central Bank and secured by the Loan Cooperation Mechanism for Ukraine, recently created in Kyiv.

Future income from immobilised Russian assets, as well as possible contributions from EU member states and other countries, should be provided to Ukraine through this mechanism to help the country repay the exceptional MFA loan, as well as loans from other G7 partners that the Commission considers acceptable. These funds will be used only to service and repay eligible loans.

The new loan does not have a target purpose, which allows Ukraine to allocate funds at its own discretion. The management and control systems set out in the Ukraine Plan, along with specific measures to prevent fraud and other violations, will also apply to the loan. The new funds will be provided by the end of 2024 and paid out by the end of 2025.

Earlier it was reported that the EU Council approved the proposal and plans to adopt the resolution in writing after the Parliament’s vote. The regulation will enter into force the day after its publication in the Official Journal of the EU.

In September, the Commission announced a €35 billion EU loan for Ukraine as part of a plan by G7 partners to issue loans of up to $50 billion (€45 billion). Future revenues from immobilised Russian state assets will finance the loans. Assets of the Central Bank of the Russian Federation in the amount of about €210 billion are in the EU and were immobilised in accordance with the sanctions imposed in connection with Moscow’s invasion of Ukraine in February 2022.

At the end of May 2024, U.S. Treasury Secretary Janet Yellen did not rule out that the G7 countries could provide Ukraine with a multi-billion-dollar loan and use the interest received from $300 billion in immobilised Russian state assets to help finance it.

At the beginning of June, the Assistant Secretary of the U.S. Treasury for International Finance, Brent Neiman, said that Washington, together with its G7 partners, is making progress in providing assistance to Ukraine by using profits from Russian assets.

On June 12, the Elysee Palace announced that the G7 leaders had reached an agreement to transfer $50 billion to Ukraine from immobilised Russian assets.

Hungary continues to oppose the EU collectively providing military support to Ukraine. Official Budapest is also blocking other decisions related to arms for Kyiv in the amount of €6.6 billion.

On October 9, EU ambassadors agreed to provide Ukraine with a loan of €35 billion. They plan to repay it from the profits from immobilised Russian assets.

On October 15, 2024, the European Parliament Committee supported the provision of a loan to Ukraine for €35 billion.

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