Ukraine President Volodymyr Zelensky and Hungarian Prime Minister Viktor Orbán, who is blocking the EU’s €90 billion loan to Kyiv Brussels, Belgium, June 27, 2024 (Olivier Hoslet/Reuters)
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Ukraine has emphasized that there is “no reliable alternative option” for funding beyond the spring if Hungary continues to block a €90 billion ($103 billion) loan from the European Union.
The EU approved the loan, covering Ukraine’s military and finanical needs into 2027, in December. But Hungary, whose Prime Minister Viktor Orbán is a long-term ally of Vladimir Putin, is blocking implementation.
Facing Parliamentary elections in April which could end his 16-year rule, Orbán is campaigned on a hardline stance against the EU and Ukraine. He is also blocking the 20th set of sanctions against Russia over its 48 1/2-month full-scale invasion.
Budapest is using the pretext that Kyiv has failed to reopen the Druzhba pipeline, carrying oil from Russia to Hungary and Slovakia, after it was damaged by a Russian strike on western Ukraine in late January.
Ukrainian officials say a $1.5 billion transfer from the International Monetary Fund and help from Japan, frontloading more than $1 billion in funds scheduled to arrive later in the year, — will maintain finances until the end of spring.
However, a top Ukrainian official highlighted the lack of options afterwards, saying domestic measures such as additional debt would costly.
Oleksandra Myronenko, an economist at Ukraine’s Center for Economic Strategy, said:
We have little capacity to raise more domestic debt. This year, we actually planned to repay more than to borrow on the internal debt market.
Ukraine’s Parliament is also struggling to pass necessary reforms to confirm around $6 billion from the World Bank and the EU’s Ukraine Facility.
An official said Ukraine and the EU and Ukraine are meeting twice a week with the hope that the bloc’s loan will be availabe from April.
“Together with EU colleagues, the Finance Ministry is actively working to secure these funds. Ukraine has assurances from EU partners that the first tranche will be available in the second quarter of 2026,” Ukraine’s Finance Ministry said.
Reports are circulating that a consortium of Nordic and Baltic countries could support Ukraine until the loan is in place.
