BRUSSELS — In a significant financial agreement, the European Commission and Ukraine have finalized a plan to expedite the release of €45 billion allocated for Kyiv in 2027, as part of the EU’s comprehensive €90 billion loan initiative. This agreement was announced in a joint statement on Thursday.

Amid escalating drone and missile assaults from Russia, Ukraine is grappling with a severe shortage of funds to procure necessary defense equipment. Prime Minister Sergii Koretskyi highlighted a looming $27 billion (€23 billion) defense funding shortfall for the current year. Ukraine aims to generate approximately $7 billion domestically, while seeking international assistance to bridge the remaining gap.

President Volodymyr Zelenskyy cautioned that without addressing this deficit within the next two months, Ukraine’s ability to purchase weapons early next year could be compromised. During a recent EU defense ministers’ meeting, there was a strong push to advance portions of the €90 billion loan designated for 2027 to the current year, as noted by EU’s chief diplomat Kaja Kallas.

However, the European Commission opted to accelerate the disbursement of the 2027 funds to next year, ensuring Ukraine receives the financial support sooner. President Zelenskyy expressed satisfaction with the progress made in discussions with the European Commission, emphasizing the agreement on the format, timeline, and necessary steps to meet Ukraine’s financial and defense requirements for 2026 and 2027.

The agreement specifies that €45 billion from the Ukraine Support Loan will be promptly allocated for 2027, contingent upon Ukraine fulfilling specific reform conditions. Once these conditions are met, the funds will be released immediately, as confirmed by a senior EU official.

Additionally, both parties have committed to identifying further budgetary and defense needs, with plans to meet monthly for coordinated efforts. The €90 billion EU loan, established last December, aims to support Ukraine financially in 2026 and 2027, with stringent conditions including adherence to the rule of law and anti-corruption measures. Of this loan, €60 billion is dedicated to defense needs.

The loan is split equally, with €45 billion allocated for each year, designed to cover two-thirds of Ukraine’s external financing needs over the two-year period. The remaining financial requirements are expected to be met by other nations, particularly G7 partners. The joint statement also urges these partners to honor their financial commitments and enhance their support in response to Ukraine’s significant challenges.

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