EU moves closer to approving €35 billion loan for Ukraine

On Tuesday, October 22, the European Parliament agreed to provide Ukraine with a loan of up to €35 billion ($37.8 billion), which will be repaid using future revenues from frozen Russian assets, as announced on the European Parliament's website.

"With 518 votes in favour, 56 against and 61 abstentions, Parliament endorsed the new macro-financial assistance (MFA) to help Ukraine against Russia’s brutal war of aggression," the statement said.

EU member states have already approved the proposal, and the Council plans to adopt the decision via a written procedure following the Parliament's vote.

The decision will come into effect the day after its publication in the EU's Official Journal.

The ERA mechanism was agreed upon by G7 leaders at a summit in Italy in June 2024. The loan will be backed by revenues from frozen Russian assets and will be free of charge for Ukraine.

Funds will be disbursed by the end of 2025.

The EU is prepared to provide most of the amount—up to €35 billion (though the sum could be smaller if the US agrees to contribute $20 billion), while Canada has pledged 5 billion Canadian dollars ($3.6 billion), and the UK will provide £2.26 billion ($3 billion).

The Ministry of Finance of Ukraine reported that the European Parliament supported the proposal to create the Ukraine Loan Cooperation Mechanism (ULCM), which will ensure a non-repayable form of macro-financial assistance.

The decision still requires approval from the EU Council. Funds are expected to be available to Ukraine by the end of this year.

"The MFA will not be tied to specific expenditures, allowing it to cover the most urgent needs, including social and humanitarian," the Ministry of Finance explained.

Frozen assets of the Russian Central Bank in the EU amount to €210 billion (around $228 billion). Depending on interest rates, revenues from these assets are currently estimated at €2.5-3 billion per year.