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Hungary has blocked the disbursement of a €90 billion loan from the European Union to Ukraine, funds intended to help stabilize the country’s finances amid the ongoing war.
Details of the Hungarian veto
According to FT, during a meeting of EU ambassadors, Hungary’s representative opposed the bloc raising funds for Ukraine through the issuance of joint debt guaranteed by the EU budget.
Since such a decision requires unanimous approval from all 27 member states, Budapest’s position effectively stalled the process. The loan is critical for Kyiv, as Ukraine could face a budget deficit as early as April. In addition, receiving these funds is key to the success of IMF negotiations for an €8 billion program.
Political context in Hungary
The blockage comes amid Hungary’s preparations for upcoming elections. Prime Minister Viktor Orban, whose party is currently trailing in polls behind the opposition “Tisa” party, has intensified anti-Ukrainian rhetoric.
He has accused Ukraine of halting operations on the Druzhba pipeline, despite the facility being damaged due to Russian attacks.
Hungarian state media also promote the narrative that financial support for Kyiv only prolongs the war at the expense of Hungarian taxpayers.
Consequences for Ukraine
FT reports that if the decision is not overturned, Ukraine risks a financial collapse in the second quarter of the year.
The EU loan had been considered an alternative after EU countries failed to agree on using frozen Russian assets to fund Ukraine’s needs.
EU loan specifics
Earlier, the EU revealed details of the €90 billion loan for Ukraine. The funds were to be raised under EU budget guarantees, but the bloc had long debated the mechanisms for disbursing the aid.
Discussions included whether the EU could charge a commission on the loaned funds provided to Ukraine.
Despite the complexity of negotiations, the European Parliament assessed Ukraine’s chances of receiving the €90 billion cautiously, considering the political pressure from individual member states.
