The European Commission has taken the next formal step towards delivering the new €90 billion Ukraine Support Loan, proposing to mobilise €45 billion this year and approving derogations intended to speed up the first defence procurement schedule, focused on drones.
The European Commission has moved to operationalise the EU’s new €90 billion Ukraine Support Loan, proposing that €45 billion be made available to Kyiv by 31 December 2026 and clearing the way for the first defence procurement schedule under the scheme, centred on drones. The package is intended to cover both Ukraine’s immediate budgetary needs and urgent military requirements during 2026 and 2027.
The Commission’s step follows its positive assessment of Ukraine’s financing strategy, submitted on 24 March. Under the structure now proposed, up to €16.7 billion would go towards budget support through the Ukraine Facility and macro-financial assistance, while €28.3 billion would be directed towards strengthening Ukraine’s defence industrial capacities. The remainder of the overall €90 billion package is foreseen for 2027.
The drone element is politically and operationally significant. The Commission said it had validated the use of procurement derogations for the first defence product schedule under the loan in order to accelerate purchases in an area where Ukraine’s battlefield demand is immediate and production cycles are comparatively fast. The broader EU position is that the majority of the loan should support Ukraine’s military and defence needs, with drones, air defence systems and ammunition identified as priorities.
For Brussels, the measure also fits into a wider industrial logic. The Council’s position on the legal framework, agreed in February, set out a two-part model: €30 billion for macroeconomic support and €60 billion for defence industrial investment and military procurement. It also stated that defence products should in principle be sourced from companies in the EU, Ukraine or EEA-EFTA countries, with limited derogations where urgent delivery requires procurement elsewhere.
That means the present Commission move is not simply another expression of political support. It is the beginning of the disbursement phase for a financing architecture designed to tie EU-level borrowing more directly to Ukrainian defence production and to procurement channels that also reinforce European industry. The EEAS has already described the loan as a source of predictable, large-scale financing at a critical moment, with the majority of the package intended to cover military and defence needs.
The legal and political process is not yet complete. The Council said in February that it aimed for a rapid agreement with the European Parliament on the final legal texts and expected the first payment to be disbursed early in the second quarter of this year, once the remaining steps were in place. The Commission has now said it will proceed with the first disbursement as soon as possible once the Council adopts the available financial assistance for 2026.
The timing matters for two reasons. First, Ukraine’s projected external financing needs remain large. The Council cited preliminary IMF projections putting remaining funding needs for 2026 and 2027 at €135.7 billion, with the EU package intended to cover two-thirds of that total. Second, the package is designed not only to keep the Ukrainian state functioning but also to accelerate the supply of equipment through defence-industrial production rather than relying solely on transfers from existing national stocks.
The result is a clearer shift in EU support from emergency assistance towards a combined financing and industrial model. If adopted as proposed, the first €45 billion tranche would mark the start of the Union’s most substantial single financing instrument yet for Ukraine’s wartime budget and defence procurement, with drones at the front of the queue.
New EU funding and procurement architecture for Ukraine shifts towards arms contracts
