Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing the Reparations Loan to Ukraine and amending Regulation (EU) 2024/792 of the European Parliament and of the Council of 29 February 2024 establishing the Ukraine Facility
Date: 2025-12-03
Institutions: European Commission, Secretariat-General
Subjects: EU aid, EU loan, Russia, Russo-Ukrainian issue, Ukraine, defence industry, economic aid, economic reconstruction, financial aid, macro-financial assistance

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   EUROPEAN COMMISSION  Brussels, 3.12.2025  COM(2025) 3502 final 2025/3502 (COD)  Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing the Reparations Loan to Ukraine and amending Regulation (EU) 2024/792 of the European Parliament and of the Council of 29 February 2024 establishing the Ukraine Facility  
 
EXPLANATORY MEMORANDUM  

1. 

• 

CONTEXT OF THE PROPOSAL  

Reasons for and objectives of the proposal  

independence,  sovereignty  and 

The  EU  is  steadfast  in  its  support  to  Ukraine,  whose  future  lies  within  the  EU.  The  EU 
supports  Ukraine’s 
its 
internationally recognised borders and is unwavering in its commitment to provide political, 
financial, economic, humanitarian, military and diplomatic support1. In light of the escalating 
Russian aggression, it is necessary to act swiftly to ensure Ukraine has access to the resources 
it urgently needs. This proposal is designed to ensure the establishment of a new instrument to 
address those urgent needs, by providing Union assistance to Ukraine in the form of a loan to 
be repaid by reparations due by Russia. 

integrity  within 

territorial 

The large-scale invasion by Russia of Ukraine, which began on 24 February 2022, has had a 
profoundly damaging impact on the country and its citizens. Despite diplomatic efforts by the 
US  and  Europe  to  achieve  a  peaceful  resolution,  and  Ukraine’s  readiness  to  engage  in 
dialogue to end the war, Russia has intensified its attacks on Ukraine, deliberately targeting 
civilians and critical infrastructures. This escalation has further exacerbated the humanitarian 
crisis, caused immense suffering for the Ukrainian people and raised the colossal human and 
financial cost of this unprovoked and unjustified military aggression. Russia’s illegal war of 
aggression is  a blatant violation of the territorial integrity, sovereignty and independence of 
Ukraine, as well as a violation of the prohibition on the use of force enshrined in Article 2(4) 
of the United Nations (UN) Charter, which is a peremptory rule of international law, and of 
the other principles of the UN Charter. The unwavering determination and courage shown by 
Ukrainians  in  defending  their  homeland  is  a  testament  to  their  strength  and  warrants  deep 
admiration and appreciation.  

In  response  to  the  recent  escalation  of  Russia’s  attacks,  on  23  October  2025,  26  Member 
States  have reiterated their resolve to  provide, in  coordination and with  likeminded partners 
and  allies,  comprehensive  political,  financial,  economic,  humanitarian,  military  and 
diplomatic support to Ukraine and its people. At that same time, those 26 Member States have 
committed to address Ukraine’s pressing financial needs for 2026-2027. Since the conflict’s 
onset,  the  EU,  its  Member  States  and  European  financial  institutions  have  collectively 
provided  Ukraine  with  comprehensive  assistance  totalling  EUR  187.3  billion,  underscoring 
the  EU's  unwavering  dedication  to  supporting  Ukraine  for  the  duration  and  to  the  extent 
necessary.  

However,  Russia’s  intensified  aggression  has  increased  Ukraine’s  financing  needs  and  calls 
for urgent investment in the Ukrainian Defence Technological and Industrial Base. It is now 
clear that additional sources of funding both from the EU and the international community are 
necessary. Ukraine’s financing needs for 2026 and 2027 are set to surpass existing projections 
by  the  International  Monetary  Fund  (IMF),  whose  eighth  review  of  the  IMF  Programme 
underlines that risks and uncertainty remain exceptionally high, with the existing programme 
having limited scope to absorb any new shocks, including from a more prolonged and intense 
war.  On  9  September  2025,  Ukraine  has  submitted  an  official  request  for  a  new  IMF 
programme  to  cover  additional  financing  needs  from  2026  to  2029.  The  IMF’s  ability  to 
proceed  with  this  programme  is  contingent  upon  receiving  sufficient  financing  assurances 
from partners, including the Union. 

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European Council Conclusions, 27 June 2024; EUCO 15/24. 

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Ukraine’s recently  presented draft budget  for 2026, developed in  cooperation with  the IMF, 
projects defence and security expenditure of EUR 56 billion, supported by EUR 51.6 billion 
of in-kind military assistance. Given the negative impact of the war on Ukraine’s economy, 
that  budget  projects  that,  in  addition  to  the  necessary  in-kind  assistance,  EUR  43  billion  of 
international  aid  is  needed.  As  of  November  2025,  only  EUR  22  billion  has  been  firmly 
committed.  Ukraine  has  limited  room  for  additional  fiscal  adjustments,  as  further  spending 
cuts  or  tax  increases  could  further  harm  the  economy,  which  is  already  vulnerable  due  to 
damage  to  key  infrastructure,  labour  shortages,  and  the  ongoing  displacement  and 
mobilisation  of  people. Swift  financial  assistance  is  vital  to  help  Ukraine  maintain  essential 
state  functions,  ensure  macroeconomic  stability,  rehabilitate  critical  energy  infrastructures, 
and  invest  into  its  Defence  Technological  and  Industrial  Base.  These  needs  come  on  top  of 
significant requirements for medium-term recovery and reconstruction. 
In their summit statement of 2 October 20252, G7 Finance Ministers agreed to take joint steps 
to increase pressure on Russia to end its continued brutal war against Ukraine and to support 
Ukraine in its ongoing efforts to defend itself. In particular, G7 Finance Ministers committed 
to developing a wide range of options to address Ukraine’s financing needs, including using 
in a coordinated way the full value of Russian assets immobilised in G7 jurisdictions to end 
the war and ensure a just and lasting peace in Ukraine, consistent with G7 legal frameworks. 
Additionally, in its conclusions of 27 June 2024, 17 October 2024, 19 December 2024 and 23 
October  2025,  the  European  Council  has  stated  that,  subject  to  Union  law,  Russia’s  assets 
should  remain  immobilised  until  Russia  ceases  its  war  of  aggression  against  Ukraine  and 
compensates it for the damage caused by this war.  

In spite of Ukraine’s financing needs to counter Russia’s aggression and, where possible, to 
reconstruct, the capacity of the Union and of its Member States to provide additional funding 
to Ukraine is currently limited and does not match the magnitude of Ukraine’s needs. Against 
this  background,  it  is  proposed  to  establish  a  new  support  instrument  for  Ukraine  of  up  to 
EUR 210 billion, which Ukraine would only repay once it receives reparations from Russia, 
financed  by  cash  balances  at  financial  institutions  in  the  Union  that  accumulate  because 
transactions regarding the assets and reserves of the Central Bank of Russia are not permitted. 

A Reparations Loan to Ukraine 

Despite the massive needs of Ukraine, the ability for the Ukrainian state to take on more debt 
is severely limited. Ukraine’s debt to GDP has drastically expanded since the start of the war, 
jumping from less than 50% of GDP at end 2021 to 85% of GDP in 2025 (more than 100% of 
GDP  including  ERA  loans).  Given  the  significant  destruction  that  the  war  has  had  on 
productivity  and  the  on-going  drag  that  the  war  has  on  growth  dynamics,  the  significant 
financing needs of Ukraine are not possible to be addressed by Ukraine taking on further debt.  

At  the  same  time,  Member  State’s  finances  are  still  recovering  from  a  succession  of  crises 
during  the  last  decade,  including  the  significant  expenses  generated  by  Russia’s  war  in 
Ukraine  and  Russia’s  hybrid  campaign  against  the  Union.  The  mobilisation  of  additional 
significant  resources  by  Member  States  to  be  able  to  finance  Ukraine  would  constitute  an 
important economic challenge. 

In this context of difficult debt dynamics of Ukraine due to the on-going Russian aggression 
and the challenges associated with Member States finances, including as of Russia’s actions, 
it  is  appropriate  to  develop  an  innovative  solution  that  is  not  expected  to  place  a  financial 
burden on either Ukraine or Member States. 

2 

G7 Finance Ministers Statement, G7 2025 Kananaskis. 

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In line with the International Law Commission’s Draft Articles on the Responsibility of States 
for Internationally Wrongful Acts (ARSIWA)3 and customary international law, Russia  – as 
the responsible state – is under an obligation to make full reparation for the injury caused by 
its war of aggression against Ukraine. In particular, Articles 30 – 32 of ARSIWA provide that 
“The  State  responsible  for  the  internationally  wrongful  act  is  under  an  obligation:  (a)  to 
cease that act, if it is continuing; [...]; “The responsible State is under an obligation to make 
full  reparation  for  the  injury  caused  by  the  internationally  wrongful  act.”  “Injury  includes 
any  damage,  whether  material  or  moral,  caused  by  the  internationally  wrongful  act  of  a 
State.” 

In the context of this legal obligation on Russia to make reparations for the damage that it has 
caused  through  its  illegal  war  of  aggression,  it  is  appropriate  for  the  Union  to  provide  the 
Reparations  Loan  to  Ukraine  as  a  limited  recourse  loan  that  will  become  due  and  payable 
when  Ukraine  receives  from  Russia  cash  or  non-monetary  assets  as  war  reparations, 
indemnities or any financial settlement from Russia, other than territory. 

Financing the Reparations Loan 
On  28  February  2022  the  Council  adopted  Decision  (CFSP)  2022/3354  amending  Council 
Decision  2014/512/CFSP5,  which  prohibited  any  transactions  related  to  the  management  of 
reserves, as well as of assets of the Central Bank of Russia, including transactions with any 
legal  person,  entity  or  body  acting  on  behalf  of,  or  at  the  direction  of,  the  Central  Bank  of 
Russia. On 9 March 2022, the Council adopted Decision (CFSP) 2022/3956 to  include such 
prohibition concerning the Russian National Wealth Fund. As a result of those prohibitions, 
the relevant assets held by financial institutions in the Member States are ‘immobilised’. The 
assets held within the borders of the Union, worth approximately EUR 210 billion, represent 
the  majority  of  such  immobilised  assets  worldwide.  The  European  Council  has  repeatedly 
stated that, subject to EU law, Russia’s assets should remain immobilised until Russia ceases 
its war of aggression against Ukraine and compensates it for the damage caused by its war.  

As  of  various  investments  of  its  foreign  reserves,  the  Russian  Central  Bank  has  a  claim  on 
certain  financial  institutions  in  the  Union.  Those  respective  financial  institutions  have  a 
liability to repay the Russian Central Bank, where the prohibition of transfers to the Russian 
Central Bank currently prohibits those financial institutions from honouring that claim. That 
claim of the Russian Central Bank is Russia’s asset, which is matched by a liability of those 
financial  institutions  to  repay.  That  asset  of  the  Russian  Central  Bank  –  and  as  such  that 
liability  of  the  financial  institution  to  repay  –  will  not  be  touched,  where  there  is  no 
interference in the property rights of the Russian Central Bank. 

The  prohibition  of  transfers  to  the  Russian  Central  Bank  generates  an  extraordinary  and 
unexpected accumulation of cash balances on the balance sheets of financial institutions. That 
accumulation  is  due  to  the  immobilisation  of  assets  and  reserves  of  the  Central  Bank  of 

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Articles  on  Responsibility  of  States  for  Internationally  Wrongful  Acts,  2001,  International  Law 
Commission. 
Council  Decision  (CFSP)  2022/335  of  28  February  2022  amending  Decision  2014/512/CFSP 
concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ L 
57, 28.2.2022, p. 4, ELI: http://data.europa.eu/eli/dec/2022/335/oj).  
Council Decision 2014/512/CFSP of 31 July 2014 concerning restrictive measures in view of Russia's 
actions  destabilising 
(OJ  L  229,  31.7.2014,  p.  13,  ELI: 
http://data.europa.eu/eli/dec/2014/512/oj). 
Council  Decision  (CFSP)  2022/395 of  9  March 2022  amending  Decision  2014/512/CFSP  concerning 
restrictive  measures  in  view  of  Russia’s  actions  destabilising  the  situation  in  Ukraine  (OJ  L  81, 
9.3.2022, p. 8, ELI: http://data.europa.eu/eli/dec/2022/395/oj). 

in  Ukraine 

situation 

the 

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Russia, or those of any legal person, entity or body acting on behalf of, or at the direction of, 
the Central Bank of Russia, such as the Russian National Wealth Fund, because any payments 
of principal and interest, coupons, dividends or other income on securities to the Central Bank 
of Russia and those persons, entities and bodies are prohibited. These cash balances are not 
the property of the Central Bank of Russia and are not protected by sovereign immunity. 

To finance the Reparations Loan, the Union would borrow from financial institutions the cash 
balances that accumulate because transactions regarding the assets and reserves of the Central 
Bank of Russia are not permitted. This is an exchange of the asset on the respective financial 
institution’s  balance  sheet  from  cash  to  a  Union  debt  instrument,  but  without  impacting  the 
liability  of  the  financial  institutions  to  repay  the  Russian  Central  Bank,  once  sanctions  are 
lifted. 

The Reparations Loan is  without prejudice to the claim of the Central Bank of Russia. That 
asset  is  not  impacted  by  the  measures  provided  under  this  proposal.  The  cash  balances 
accumulating on the balance sheets of financial institutions as a result of the immobilisation 
do not belong to the Central Bank of Russia and do not constitute sovereign assets. 

Regarding  the  borrowing  from  financial  institutions,  it  is  noted  that  Decision  (CFSP) 
2024/5777 clarifies that balance sheet management transactions linked to assets and reserves 
of the Central Bank of Russia, or linked to assets and reserves of any legal person, entity or 
body  acting  on  behalf  of,  or  at  the  direction  of,  the  Central  Bank  of  Russia,  such  as  the 
Russian  National  Wealth  Fund,  are  not  within  the  scope  of  the  prohibition  of  transactions 
which  applies  since  28  February  2022.  The  balance  sheet  management  transactions  that 
remain  authorised  relate  in  particular  to  the  reinvestment  of  cash  balances,  accumulating  in 
particular  due  to  immobilised  coupon  or  dividend  and  redemption  payments  and  maturing 
deposits,  in  line  with  a prudent  investment  policy,  in  accordance  with  applicable  regulatory 
requirements. 

The Union would use the cash proceeds from this debt instrument to fund a limited recourse 
Reparations  Loan  to  Ukraine.  That  loan  would  be  repaid  by  Ukraine  once  it  receives  the 
reparations due from Russia, which it is legally entitled to. Therefore, the Reparations Loan 
constitutes a reversible  mechanism, whereby  once the  conditions  for lifting  the sanctions as 
expressed  by  the  European  Council  and  the  G7  are  met  –  namely  Russia  ceases  its  war  of 
aggression against Ukraine and compensates it for the damage caused by this war – Ukraine 
will repay the Union, the Union will repay its borrowing from financial institutions, and those 
financial institutions will repay the Russian Central Bank. 

The  borrowing  for  a  limited  time  from  financial  institutions  of  cash  balances  that  only 
accumulate  because  transactions  regarding  the  assets  and  reserves  of  the  Central  Bank  of 
Russia are not permitted would not be used for general Union expenditure and would be used 
exclusively  for  the  limited  purpose  of  financing  the  Reparations  Loan  to  Ukraine.  Such  an 
approach of using cash balances that do not arise out of a normal business context to finance a 
loan to Ukraine is a limited and proportional response to the situation. 

The borrowing should fully protect the financial position of the relevant  financial institution 
and enable them to honour all contractual commitments related to the assets and reserves of 
the  Central  Bank  of  Russia.  To  that  end,  Member  States  may  provide  irrevocable, 
unconditional  and  on-demand  guarantees  to  the  Union  to  support  such  borrowing.  Those 

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Council  Decision  (CFSP)  2024/577  of  12  February  2024  amending  Decision  2014/512/CFSP 
concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ L, 
2024/577, 14.2.2024, ELI: http://data.europa.eu/eli/dec/2024/577/oj). 

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guarantees may be provided by Member States in line with their respective relative share in 
the total Gross National Income of the Union. As a second line of defence, the Union should 
be endowed with a liquidity mechanism, enabling Union borrowing to support repayments if 
necessary. Finally, as a third layer of defence, the Union should be able to meet is obligations 
with  Union  debt  securities.  This  three-tier  defence  ensures  that  there  is  no  scenario  under 
which relevant financial institutions will not be repaid in order to ensure that they are able to 
honour all contractual commitments related to the assets and reserves of the Central Bank of 
Russia. 

The  obligation  for  financial  institutions  holding assets  and  reserves  for  the  Central  Bank  of 
Russia  to  make  this  investment  is  established  in  separate  acts.  Given  the  context  in  which 
these  measures  are  taken  and  the  legitimate  aim  of  the  measures  in  that  accompanying 
proposal  for  the  pursuit  of  the  Union’s  foreign  and  security  policy  objectives,  in  particular 
preserving the Union’s values, fundamental interests, security, independence and integrity, the 
consolidation of and support for democracy, the rule of law, human rights and the principles 
of  international  law,  including  international  humanitarian  law,  the  right  to  self-defence  and 
the prohibition of aggression under the UN Charter, the preservation of peace, prevention of 
conflicts and strengthening of international security and the protection of civilian populations 
as well as assisting populations confronting man-made disasters, such as those inflicted upon 
Ukraine  and  its  population  by  Russia’s  war  of  aggression,  these  measures  fully  respect  the 
fundamental  rights  and  freedoms  recognised  in  the  Charter  of  Fundamental  Rights,  in 
particular Article 17 thereof, as they are justified and proportionate to the objectives pursued 
in line with Article 52. 

Use of funds 

Given Ukraine’s financing needs and the considerable uncertainty on the future of the war, it 
is  critical  that  the  Reparations  Loan  is  designed  in  a  flexible  manner  that  is  reactive  to  the 
situation. There should be flexibility to use the money towards most pressing financing needs, 
whether  driven  by  the  current  war  situation  or  also  to  support  reconstruction  should  peace 
prevail. 

This  proposal  provides  for  a  Reparations  Loan  to  Ukraine  that  will  be  delivered  in  a 
predictable,  continuous,  orderly,  flexible  and  timely  manner  with  a  view  to  supporting 
Ukraine  in  covering  its  financing  and  defence  needs,  in  particular  those  resulting  from 
Russia’s  war  of  aggression.  Specifically,  the  Reparations  Loan  should  support  macro-
financial  stability  in  Ukraine  and  ease  its  external  financing  constraints,  whether  driven  by 
war  or  by  reconstruction,  and  support  Ukraine’s  defence  industrial  capacities  through 
economic, financial and technical cooperation.  

To support macro-financial stability in Ukraine and ease its external financing constraints, the 
proposal creates multiple options via which the funds can be channelled to support Ukraine, 
where support would be able to be provided through macro-financial assistance and through 
the  Ukraine  Facility.  Under  both  instruments,  disbursements  will  be  linked  to  preconditions 
and policy conditions. For macro-financial assistance, those conditions would be set out in a 
memorandum  of  understanding  (MoU)  between  the  Commission  and  Ukraine  including 
conditions  to  strengthen  revenue  mobilisation,  improving  the  sustainability  and  quality  of 
public expenditure and enhance the efficiency, transparency and accountability of the public 
finance management systems. For the Ukraine Facility, the Ukraine Plan should be updated to 
reflect these additional amounts, including measures to strengthen the rule of law and the fight 
against corruption. 

To support Ukraine’s defence industrial capacities through economic, financial and technical 
cooperation,  the  proposal  provides  for  assistance  that  aims  at  enabling  Ukraine  to  carry  out 

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urgent  and  major  public  investments  in  support  of  the  Ukrainian  defence  industry  and  its 
integration into the European defence industry in response to and following the current crisis 
situation. In order to  urgently reinforce the Ukrainian  defence  industrial  base in  an efficient 
and autonomous manner, eligibility criteria should be structured in a manner that directs the 
activities,  expenditures  and  measures  to  support  Ukraine’s  defence  industrial  capacities 
the  Ukrainian  Defence 
towards 
Technological and Industrial Base, taking into account its gradual future integration into the 
European Defence Technological and Industrial Base. Furthermore, in order to allow Ukraine 
to  use  the  financial  and  economic  assistance  in  the  way  that  is  the  most  adapted  to  the 
circumstances, it is appropriate to allow it to employ the funds to support Ukraine’s defence 
industrial  capacities  by  different  implementation  methods  that  reflect  the  diversity  of  the 
needs. 

the  reconstruction,  recovery  and  modernisation  of 

The  financial  and  economic  assistance  available  under  the  Reparations  Loan  will  be  made 
accessible  to  Ukraine  in  line  with  its  financing  needs.  To  that  end,  Ukraine  will  submit  a 
Ukrainian Financing Strategy on Ukraine’s financing needs and sources. Upon assessment of 
the  Commission,  the  Council  would  approve  that  assessment  and  determine  the  amount  of 
assistance to be made accessible to Ukraine to assist in the implementation of the Ukrainian 
Financing Strategy. 

Where  a  Member  State  suffers  damage  as  a  result  of  an  enforcement  in  a  third  country  of 
investor-State  arbitral  awards  in  connection  with  measures  imposed  regarding  restrictions 
concerning  the  Central  Bank  of  Russia,  the  Union  should  ensure  fair  sharing  and  solidarity 
with that Member State through the conclusion of guarantee agreements with Member States 
covering  the  risk  of  such  damages.  Separate  proposals  ensure  that  this  mechanism  of  fair 
sharing  and  solidarity  is  construed  so  as  to  avoid  double  payment  to  the  Central  Bank  of 
Russia when the transaction prohibition is lifted. If amounts are called under these guarantees, 
the  amount  due  by  the  Union  to  financial  institutions  will  be  reduced  by  an  equivalent 
amount.  Financial  institutions  will  then  reduce  their  liabilities  towards  the  Central  Bank  of 
Russia  for  an  equivalent  amount.  Until  the  necessary  provisions  are  established  under  the 
system  of  own  resources  and  the  Multiannual  Financial  Framework,  that  mechanism  of  fair 
sharing  and  solidarity  should  take  into  consideration  those  Member  States  that  have 
participated in solidarity by sharing risk under the Reparations Loan. 

Bilateral  investment  treaties  concluded  between  certain  Member  States  and  the  Russian 
Federation are not  consistent with  the investment  protection policy developed by the Union 
pursuant to Article 207 TFEU since the entry into force of the Treaty of Lisbon. The Member 
States concerned are to withdraw from or terminate, as appropriate, those bilateral investment 
treaties  and  adopt  a  common  attitude  to  achieve  this.  The  Commission  should  facilitate  the 
coordination of the Member States, including by submitting legislative proposals. 

• 

Consistency with existing policy provisions in the policy area 

The  support  under  the  Reparations  Loan  will  be  consistent  with  and  complementary  to  the 
through  Regulation  (EU)  2024/7928,  Regulation  (EU)  2021/9479, 
support  provided 

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the 

Ukraine 

Regulation  (EU)  2024/792  of  the  European  Parliament  and  of  the  Council  of  29  February  2024 
ELI: 
establishing 
http://data.europa.eu/eli/reg/2024/792/oj).   
Regulation (EU) 2021/947 of the European Parliament and of the Council of 9 June 2021 establishing 
the  Neighbourhood,  Development  and  International  Cooperation  Instrument  –  Global  Europe, 
amending and repealing Decision No 466/2014/EU of the European Parliament and of the Council and 
repealing  Regulation  (EU)  2017/1601  of  the  European  Parliament  and  of  the  Council  and  Council 

29.2.2024, 

2024/792, 

Facility 

(OJ 

L, 

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Regulation  (EC)  No  1257/9610,  Regulation  (EC)  No  2024/277311  and  Regulation  (EU) 
2025/110612, and is in line with the respective objectives, intervention logic and rules of these 
instruments. 

In  particular,  the  Reparations  Loan  comes  in  addition  and  is  complementary  to  the  support 
provided  by  the  EU  under  the  G7  ERA  Loans  initiative  and  the  Ukraine  Facility.  Specific 
attention is paid to the consistency and mutual reinforcement of the Reparations Loan and the 
implementation  of  defence  policies,  provided  under  the  SAFE  Regulation  and  the  proposed 
EDIP Regulation. 

• 

Consistency with other Union Policies 

The  support  under  the  Reparations  Loan  initiative  is  consistent  with  the  application  of 
restrictive  measures  (sanctions)  against  Russia  and  complementary  to  the  European  Peace 
Facility. 

Furthermore, the candidate status granted by the European Council on 23 June 2022 and the 
decision of the 14-15 December 2023 European Council to open accession negotiations with 
Ukraine anchors Ukraine firmly on its European path. For this reason, the whole EU response 
in  support  of  Ukraine’s  resilience  and  recovery  –  including  through  the  Reparations  Loan, 
which  will  in  turn  be  consistent  with  and  supporting  the  implementation  of  the  Ukraine 
Facility – will also contribute to the early phase of Ukraine’s pre-accession process. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 212 TFEU is an appropriate legal basis for financial assistance programmes granted by 
the Union for third countries, which are not developing countries. 

• 

Subsidiarity (for non-exclusive competence) 

The  subsidiarity  principle  is  respected  as  the  need  for  a  common  response  in  providing 
support to  Ukraine on adequate scale cannot  be  sufficiently achieved by the Member States 
alone  and,  by  reasons  of  its  scale  and  effect,  can  be  better  achieved  by  the  EU.  The  main 
reasons  are  the  fiscal  capacity  and  budgetary  constraints  faced  at  the  national  level  and  the 
need  for  strong  donor  coordination  in  order  to  maximise  the  scale  and  effectiveness  of  the 
support,  while  limiting  the  burden  on  the  administrative  capacity  of  Ukrainian  authorities, 
which is very stretched in the current circumstances. The EU is in a unique position to deliver 
external  assistance  to  Ukraine  to  provide  support  in  covering  urgent  budgetary  needs  in  a 
predictable,  continuous,  orderly  and  timely  manner,  including  those  linked  to  supporting 
Ukraine’s defence industrial capacities. 

10 

11 

12 

Regulation  (EC,  Euratom)  No  480/2009  (Text  with  EEA  relevance) (OJ  L 209,  14.6.2021, p.  1,  ELI: 
http://data.europa.eu/eli/reg/2021/947/2021-06-14). 
Council  Regulation  (EC)  No  1257/96  of  20  June  1996  concerning  humanitarian  aid  (OJ  L  163, 
2.7.1996, p. 1, ELI: http://data.europa.eu/eli/reg/1996/1257/2019-07-26). 
Regulation  (EU)  2024/2773  of  the  European  Parliament  and  of  the  Council  of  24  October  2024 
establishing  the  Ukraine  Loan  Cooperation  Mechanism  and  providing  exceptional  macro-financial 
assistance to Ukraine (OJ L, 2024/2773, 28.10.2024, ELI: http://data.europa.eu/eli/reg/2024/2773/oj). 
Council  Regulation  (EU)  2025/1106  of  27  May  2025  establishing  the  Security  Action  for  Europe 
(SAFE)  through  the  Reinforcement  of  the  European  Defence  Industry  Instrument  (OJ  L,  2025/1106, 
28.5.2025, ELI: http://data.europa.eu/eli/reg/2025/1106/oj). 

EN 

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• 

Proportionality 

The  continued  unprovoked  and  unjustified  military  aggression  by  Russia  requires  granting 
additional financial assistance to Ukraine in line with the objectives and modalities described 
under this proposal. 

The  proposed  financial  support  to  Ukraine  is  considered  adequate  in  size,  based  on  the 
elevated  funding  needs  and  best  estimates  of  Ukraine’s  defence  needs  submitted  by  the 
national authorities, while taking into account the high uncertainty of the war circumstances. 
Such  support  does  not  go  beyond  what  is  necessary  for  the  sought  purpose  to  provide 
structured support to Ukraine and its related financing. 

The  proposal  is  proportionate  to  the  scale  and  gravity  of  the  deficiencies  that  have  been 
identified, including the need to provide budget support to Ukraine, and the need to carry out 
urgent and major public investments in support of the Ukrainian Defence  Technological and 
Industrial  Base  and  its  integration  into  the  European  Defence  Technological  and  Industrial 
Base. The proposal respects the limits of possible Union intervention under the Treaties. 

• 

Choice of the instrument 

A Regulation of the European Parliament and of the Council is the appropriate instrument as 
it provides directly applicable rules for the implementation of the Reparations Loan.  

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

The  proposal  follows  a  series  of  macro-financial  assistance  operations  provided  to  Ukraine 
since  2015.  Past  ex-post  evaluations  of  previous  macro-financial  assistance  operations  to 
Ukraine  have  shown  that  in  general  they  were  highly  relevant  in  terms  of  their  objectives, 
financial envelope and policy conditions. In particular, macro-financial assistance operations 
proved  crucial  to  support  Ukraine  in  addressing  its  balance-of-payment  problems  and 
implementing key structural reforms to stabilise the economy and enhance the sustainability 
of its external position. They allowed for fiscal savings and financial benefits and acted as a 
catalyst for additional financial support and investor confidence. The conditionality attached 
to  the  macro-financial  assistance  operations  was  found  complementary  to  the  related  IMF 
programmes. It created a politically reinforcing effect that contributed to the mobilisation of 
the  Ukrainian  authorities  around  essential  reforms,  especially  in  structural  policy  areas  that 
are less covered by other international donor programmes. 

• 

Stakeholder consultations 

The proposal follows up on the statement of 26 Member States on 23 October 2025 where the 
Commission was invited to present, as soon as possible, options for financial support based on 
an assessment of Ukraine’s financing needs and invited the Commission and the Council to 
take  work  forward.  In  the  preparation  of  this  proposal,  the  Commission  services  have 
consulted with international financial institutions and other bilateral (including Member States 
and G7 members) and multilateral donors. The Commission is also in regular contact with the 
Ukrainian authorities. 

Due  to  the  urgency  of  preparing  the  proposal  for  timely  adoption  by  the  co-legislators  and 
ensuring its operational status by early 2026, a formal stakeholder consultation could not be 
conducted. This approach aims to address the emerging and escalating defence and budgetary 
demands resulting from Russia’s war of aggression. These needs encompass efforts related to 
recovery  and  reconstruction.  The  European  Union  will  ensure  adequate  communication  and 

EN 

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visibility regarding the objectives and actions implemented under the scope of the Reparations 
Loan, both within Ukraine, across the Union, and internationally. 

• 

Collection and use of expertise 

The proposal builds on decades long experience with macro-financial assistance as well as on 
experience with the Union’s external action support.  

The  Commission  based  this  proposal  on  a  careful  analysis,  also  building  on  inputs  from 
international  financial  institutions  and  other  competent  international  institutions,  of  the 
defence needs and broader macro-financial situation of Ukraine. This includes discussions on 
a regular basis of the latest projections of Ukraine’s funding needs within international fora, 
such  as  the  G7  and  the  IMF,  as  well  as  continuous  direct  contact  with  the  Ukrainian 
authorities. 

• 

Impact assessment 

Due to the urgent nature of the proposal, which is designed to provide urgent assistance to a 
country at war, no impact assessment could be carried out. The ex-ante assessment of needs 
proposed  to  be  covered  by  the  Reparations  Loan  inter  alia  draw  upon  recent  data  from  the 
IMF and Ukrainian authorities. The support under the Reparations Loan should build upon the 
lessons  learned  and  achievements  of  recent  support  initiatives,  such  as  the  G7  ERA  Loans 
initiative. 

• 

Regulatory fitness and simplification 

The proposal is not linked to regulatory fitness and simplification. 

• 

Fundamental rights 

A precondition for granting support under the Reparations Loan is that Ukraine continues to 
uphold  and  respect  effective  democratic  mechanisms  and  its  institutions,  including  a  multi-
party  parliamentary  system,  and  the  rule  of  law,  and  to  guarantee  respect  for  human  rights, 
including those of persons belonging to minorities. Upholding and respecting the rule of law 
should include the fight against corruption. 

The reform-commitment and political will by the Ukrainian authorities is a positive sign, in 
particular as evidenced by the European Council granting candidate status to Ukraine in June 
2022  and  the  European  Council  decision  of  December  2023  to  open  accession  negotiations 
with  Ukraine,  by  the  renewed  successful  completion  of  the  structural  policy  conditionality 
attached  to  the  recent  macro-financial  assistance  operations  to  Ukraine  and  the  continuing 
implementation of the Ukraine Plan. On 14 May 2025, Ukraine adopted roadmaps on (among 
others)  the  rule  of  law,  public  administration  reform  and  on  the  functioning  of  democratic 
institutions.  Bilateral  screening  meetings  were  completed  in  September  2025.  Since  the 
Russian aggression, the Ukrainian authorities have shown an impressive degree of resilience 
and have remained committed to pursue these reforms in a  transparent manner and working 
towards EU standards and in line with the country’s path towards EU integration. 

In view of this, the precondition for the Reparations Loan is considered to be met at present. 
Concurrently,  the  continuous  adherence  to  this  precondition  will  be  further  ensured  by 
specific  conditions  relating  to  the  Commission’s  assessment  of  future  Ukrainian  Financing 
Strategies  and  before  disbursements.  A  similar  precondition  for  support  is  applicable  to  the 
implementation of the Ukraine Plan. 

EN 

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4. 

BUDGETARY IMPLICATIONS 

The  proposal  is  compatible  with  the  ceilings  of  the  2021-2027  multiannual  financial 
framework and ceilings of the own resources decision. 

The Reparations Loan to Ukraine will take the form of a limited recourse loan to Ukraine of 
up  to  EUR  210  billion  to  be  repaid  by  reparations  due  by  Russia.  The  loan  will  be 
underpinned by a system of guarantees from Member States or guarantee provided under the 
multiannual financial framework in order to ensure that the contingent liability for the Union 
arising from the Reparations Loan is compatible with the Union budget constraints. 

For  the  approach  to  serve  the  intended  purpose,  Member  States  may  provide  irrevocable, 
unconditional  and  on-demand  guarantees  to  the  Union,  in  line  with  their  respective  relative 
share in the total Gross National Income of the Union. Third countries can contribute to the 
Reparations  Loan  by  providing  irrevocable,  unconditional  and  on-demand  guarantees  over 
and  above  the  guarantees  provided  by  Member  States.  Alternatively,  third  countries  may 
contribute  to  the  Reparations  Loan  by  supporting  currency  risk  management  related  to  any 
conversion of the cash balances borrowed from financial institutions. 

In  addition  to  the  provision  of  Member  State  guarantees,  a  safeguard  is  built  into  the 
framework in order to ensure the financial solidity of the scheme through a dedicated liquidity 
mechanism, available for the repayment of the debt obligation of the Union towards financial 
institutions. 

The guarantees provided to the Union by Member States should cease to be callable once a 
decision on the system of own resources of the Union pursuant to Article 311(2) TFEU and a 
multiannual  financial  framework  pursuant  to  Article  312  TFEU,  both  providing  for  a 
guarantee under the Union budget, have entered into force and are applicable. 

Further  details  on  the  budgetary  implications  are  provided  in  the  Legislative  Financial 
Statement  attached  to  this  proposal.  The  Reparations  Loan  will  make  available  support 
progressively  following the entry into force of each guarantee agreement and in  instalments 
which may be disbursed in one or more tranches. The Reparations Loan will be available until 
31 December 2030, with the exception of the assistance designated as available exclusively to 
maintain the ERA Loans initiative, which will be available until 31 December 2055.  

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The  Reparations  Loan  will  be  for  a  maximum  amount  of  EUR  210  billion,  to  be  made 
available in accordance with Ukraine’s financing needs per the provisions of this proposal. 

Specifically, for the purposes of implementing the Reparations Loan Regulation, Ukraine is to 
submit  to  the  European  Commission  a  Ukrainian  Financing  Strategy  providing  details  on 
Ukraine’s financing needs and financing sources in principle for the forthcoming 12 months. 
The  Commission  is  to  assess  the  Ukrainian  Financing  Strategy  and,  in  case  of  a  positive 
assessment, submit a proposal to the Council for the approval of its assessment by means of 
an implementing decision. The Commission’s proposal will outline the amount of assistance 
to  be  made  available  to  Ukraine  to  assist  in  the  implementation  of  the  Ukrainian  Financing 
Strategy, including the amount of that assistance accessible for (i) macro-financial assistance, 
(ii) assistance through the Ukraine  Facility  and  (iii) assistance to  support Ukraine’s  defence 
industrial capacities.  

EN 

10 

  EN 

To  receive  financial  and  economic  assistance  under  the  Reparations  Loan,  Ukraine  will 
submit  to  the  Commission  a  duly  justified  request  for  funds,  which  may  be  submitted  by 
Ukraine to the Commission, in principle, six times a year. 

Furthermore,  the  Commission  will  submit  to  the  European  Parliament  and  to  the  Council  a 
report on the implementation of the Reparations Loan Regulation in the preceding year, which 
will  include  an  evaluation  of  that  implementation.  Additionally,  by  31  December  2031,  the 
Commission will submit to the European Parliament and to the Council an evaluation report, 
assessing the results and efficiency of the Reparations Loan provided under the Reparations 
Loan Regulation and the extent to which it has contributed to the aims of the assistance. 

Finally,  in  order  to  enhance  the  dialogue  between  the  Union  institutions,  in  particular  the 
European  Parliament,  the  Council  and  the  Commission,  and  to  ensure  greater  transparency 
and  accountability,  the  competent  committee  of  the  European  Parliament  may  invite  the 
Commission to discuss the implementation of this Regulation. 

• 

Detailed explanation of the specific provisions of the proposal 

Chapter I of the Regulation concerns its general provisions. 

Article  1  provides  the  subject  matter  of  the  Regulation,  which  is  the  establishment  of  the 
Reparations Loan to Ukraine. 

Article  2  defines  the  general  and  specific  objectives  of  the  Reparations  Loan,  which  are  to 
provide  financial  and  economic  assistance  to  Ukraine  in  a  predictable,  continuous  manner, 
through supporting Ukraine’s macro-financial stability and defence industrial capacities. 

Article 3 provides the definitions applicable under the Regulation. 

Article 4 sets the available assistance under the Reparations Loan. 

Article 5 prescribes the preconditions for assistance under the Reparations Loan. 

Chapter II of the Regulation concerns the implementation of the Reparations Loan. 

Article  6  stipulates  that  Ukraine  shall  submit  to  the  Commission  the  Ukrainian  Financing 
Strategy,  providing  details  on  its  contents,  with  specific  reference  to  Ukraine’s  needs  and 
financing resources for the next 12 months. 

Article 7 provides for the assessment by the Commission of the Ukrainian Financing Strategy, 
defining the necessary criteria to be observed. 

Article  8  provides  for  a  Council  implementing  decision  making  the  financial  and  economic 
assistance accessible. 

Article  9  provides  for  the  close  cooperation  between  the  Commission,  Ukraine,  Member 
States, relevant international bodies and donors to Ukraine to ensure a coherent and consistent 
approach to address Ukraine’s financial and economic assistance needs. 

Chapter III of the Regulation concerns the Macro-Financial Assistance. 

Article  10  provides  for  the  purpose  of  macro-financial  assistance,  notably  to  contribute  to 
covering  Ukraine’s  financing  gap  as  identified  in  a  positively  assessed  Ukrainian  Financing 
Strategy. 

Article 11 sets out that the Commission shall agree with Ukraine on the policy conditions to 
which  the  support  is  to  be  linked,  which  shall  be  described  in  a  memorandum  of 
understanding. 

Chapter  IV  of  the  Regulation  concerns  assistance  to  support  Ukraine’s  Defence  Industrial 
Capacities. 

EN 

11 

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Article 12 provides for the purpose of the assistance to support Ukraine’s defence industrial 
capacities,  notably  to  carry  out  urgent  and  major  public  investments  in  support  of  the 
Ukrainian defence industry and its integration into the European defence industry.  

Article  13  defines  the  eligibility  conditions  for  the  activities,  expenditures  and  measures  to 
support Ukraine’s defence industrial capacities.  

Article 14 requires  Ukraine to  produce a schedule for each  activity, expenditure or measure 
related  to  a  defence  product  or  other  product  for  defence  purposes  for  which  it  intends  to 
request assistance.  

Article 15 prescribes the establishment of the Ukraine’s Defence Industrial Capacities Expert 
Group.  

Article  16  provides  for  the  opening  of  a  special  account  for  the  sole  purpose  of  the 
management  of  the  financial  and  economic  assistance  received  by  Ukraine  to  support  its 
defence industrial capacities.  

Article  17  sets  out  the  monitoring  requirements  for  the  assistance  provided  to  support 
Ukraine’s defence industrial capacities.  

Article 18 defines the conditions for the modification of an existing framework agreement or 
contract for defence products.  

Article  19  allows  for  Member  States,  for  the  sole  purpose  of  the  Regulation,  to  request  an 
economic operator on its territory, to prioritise certain order of defence products.  

Chapter  V  of  the  Regulation  concerns  the  financing  and  implementation  of  the  Reparations 
Loan.  

Article  20  stipulates  that  the  detailed  financial  terms  of  the  Reparations  Loan  shall  be  laid 
down in the Reparations Loan Agreement and sets out certain mandatory requirements.  

Article 21 sets out that in order for Ukraine to receive financial and economic assistance, it 
shall submit to the Commission a duly justified request for funds.  

Article 22 prescribes the requirements on the Commission for making a decision to release an 
instalment under the Reparations Loan.  

Article 23 empowers the Commission to borrow the necessary cash balances, on behalf of the 
Union, to finance the Reparations Loan.  

Article 24 lays out methods for fair sharing and solidarity regarding the Reparations Loan.  

Article 25 sets  out  that Member States may contribute by providing guarantees  of up to  the 
total amount of the Reparations Loan.  

Article  26  lays  out  the  provisions  of  the  guarantee  agreement  to  be  signed  between  the 
Commission and Member States providing a guarantee as defined in Article 25.  

Article  27  allows  for  third  countries  to  provide  guarantees  or  support  currency  risk 
management.  

Article 28 lays out the rules on classified information and sensitive information.  

Chapter VI concerns final provisions.  

Article 29 empowers the Commission to adopt delegated acts, subject to conditions.  

Article 30 regulates the governance through committee procedures.   

EN 

12 

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Article  31  provides  for  a  Reparations  Loan  dialogue,  which  foresees  to  enhance 
communication  between  the  Union  institutions,  in  particular  the  European  Parliament,  the 
Council and the Commission.  

Article  32  prescribes  the  provision  of  information  to  the  European  Parliament  and  to  the 
Council.  

Article 33 regulates the entry into force.  

2025/3502 (COD) 

EN 

13 

  EN 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

establishing the Reparations Loan to Ukraine and amending Regulation (EU) 2024/792 
of the European Parliament and of the Council of 29 February 2024 establishing the 
Ukraine Facility 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 212 TFEU thereof, 

Having regard to the proposal from the Commission, 

After transmission of the draft legislative act to the national parliaments, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

13 

14 

15 

On  24  February  2022,  the  President  of  the  Russian  Federation  announced  a  military 
operation in Ukraine, and Russia’s armed forces began an unprovoked and unjustified 
military  aggression  against  Ukraine.  This  illegal  war  of  aggression  is  a  blatant 
violation of the territorial integrity, sovereignty and independence of Ukraine, as well 
as  a  violation  of  the  prohibition  on  the  use  of  force  enshrined  in  Article  2(4)  of  the 
United Nations (UN) Charter, which is a peremptory rule of international law, and of 
the other principles of the UN Charter. 

Since the beginning of Russia’s unprovoked and unjustified war of aggression against 
Ukraine,  the  Union,  its  Member  States  and  European  financial  institutions  have 
mobilised  unprecedented  support  for  Ukraine’s  economic,  social,  financial  and 
defence  resilience.  That  support  combines  support  from  the  Union  budget,  including 
exceptional  macro-financial  assistance  and  support  from  the  European  Investment 
Bank and the European Bank for  Reconstruction and Development, fully or partially 
guaranteed  by  the  Union  budget,  as  well  as  further  financial  support  by  Member 
States. 
Decision (EU) 2022/313 of the European Parliament and the Council13, Decision (EU) 
2022/1201 of the European Parliament and the Council14, Decision (EU) 2022/1628 of 
the  European  Parliament  and  the  Council15  and  Regulation  (EU)  2022/2463  of  the 

L 

55, 

(OJ 

assistance 

to  Ukraine 

Decision (EU) 2022/313 of the European Parliament and of the Council of 24 February 2022 providing 
macro-financial 
ELI: 
http://data.europa.eu/eli/dec/2022/313/oj). 
Decision  (EU)  2022/1201  of  the  European  Parliament  and  of  the  Council  of  12  July  2022  providing 
exceptional  macro-financial  assistance 
(OJ  L  186,  13.7.2022,  p.  1,  ELI: 
to  Ukraine 
http://data.europa.eu/eli/dec/2022/1201/oj). 
Decision  (EU)  2022/1628  of  the  European  Parliament  and  of  the  Council  of  20  September  2022 
providing exceptional macro-financial assistance to Ukraine, reinforcing the common provisioning fund 
by  guarantees  by  Member  States  and  by  specific  provisioning  for  some  financial  liabilities  related  to 
Ukraine guaranteed under Decision No 466/2014/EU, and amending Decision (EU) 2022/1201 (OJ L 
245, 22.9.2022, p. 1, ELI: http://data.europa.eu/eli/dec/2022/1628/oj). 

28.2.2022, 

4, 

p. 

EN 

1 

  EN 

 
European Parliament and the Council16 collectively made available EUR 25.2 billion 
of  macro-financial  assistance  to  Ukraine  throughout  2022  and  2023.  This  support 
constituted  a  major  contributing  factor  to  Ukraine’s  macroeconomic  and  financial 
resilience at a critical time. 

 On 29 February 2024, Regulation (EU) 2024/792 of the European Parliament and of 
the  Council17  established  the  Ukraine  Facility  as  an  exceptional  medium-term 
instrument that brings together the bilateral support provided by the Union to Ukraine, 
ensuring coordination and efficiency (the ‘Ukraine Facility’). Over the period 2024 to 
2027, the Ukraine Facility helps address Ukraine’s financing needs and contributes to 
its  recovery,  reconstruction  and  modernisation  needs,  while  at  the  same  time 
supporting Ukraine’s reforms effort as part of its path towards accession to the Union. 

On 24 October 2024, Regulation (EU) 2024/2773 of the European Parliament and the 
Council18  established  the  Ukraine  Loan  Cooperation  Mechanism  and  provided 
exceptional  macro-financial  assistance  to  Ukraine.  That  assistance  was  the  Union 
contribution  as  part  of  the  G7  ‘Extraordinary  Revenue  Acceleration  Loans  for 
Ukraine’ initiative, which collectively assisted in addressing Ukraine’s financing gap 
for 2025. 

Russia’s  war  of  aggression  against  Ukraine  has  caused  tremendous  damage  in 
Ukraine, with estimated recovery and reconstruction costs of EUR 506 billion as of 31 
December 2024. Moreover, Ukraine has lost access to international financial markets 
and  experienced  a  significant  drop  in  public  revenue,  while  public  expenditure  has 
increased  substantially.  Against  that  background,  substantive  funding  needs  for  the 
coming years can be foreseen. 

On  9  September  2025,  Ukraine  submitted  an  official  request  to  the  International 
Monetary Fund (IMF) for a new programme to cover additional financing needs from 
2026  to  2029.  That  programme  would  succeed  the  successful  implementation  of  the 
existing  IMF  programme,  where  Ukraine  completed  eight  reviews,  but  takes  into 
consideration  that  Russia’s  war  of  aggression  has  continued.  The  IMF’s  ability  to 
proceed  with  this  programme  is  contingent  upon  receiving  sufficient  financing 
assurances from other partners, including the European Union. 

On  23  October  2025,  26  Member  States  committed  to  address  Ukraine’s  pressing 
financial  needs  for  2026-2027,  including  for  its  military  and  defence  efforts.  Those 
Member  States  also  underlined  the  critical  need  to  ensure  that  Ukraine  remains 
resilient and has the budgetary and military means to continue to exercise its inherent 
right  of  self-defence  and  counter  Russia’s  aggression,  and  reaffirmed  that  the 
European  Union  will  continue  to  provide,  in  coordination  with  like-minded  partners 
and  allies,  comprehensive  political,  financial,  economic,  humanitarian,  military  and 
diplomatic support to Ukraine and its people. Those Member States further concluded 
that all military support as well as security guarantees for Ukraine will be provided in 

Regulation  (EU)  2022/2463  of  the  European  Parliament  and  of  the  Council  of  14  December  2022 
establishing an instrument for providing support to Ukraine for 2023 (macro-financial assistance +) (OJ 
L 322, 16.12.2022, p. 1, ELI: http://data.europa.eu/eli/reg/2022/2463/oj). 
Regulation  (EU)  2024/792  of  the  European  Parliament  and  of  the  Council  of  29  February  2024 
establishing 
ELI: 
http://data.europa.eu/eli/reg/2024/792/oj). 
Regulation  (EU)  2024/2773  of  the  European  Parliament  and  of  the  Council  of  24  October  2024 
establishing  the  Ukraine  Loan  Cooperation  Mechanism  and  providing  exceptional  macro-financial 
assistance to Ukraine (OJ L, 2024/2773, 28.10.2024, ELI: http://data.europa.eu/eli/reg/2024/2773/oj). 

29.2.2024, 

2024/792, 

Ukraine 

Facility 

(OJ 

the 

L, 

(4) 

(5) 

(6) 

(7) 

(8) 

16 

17 

18 

EN 

2 

  EN 

 
full respect of the security and defence policy of certain Member States and taking into 
account the security and defence interests of all Member States. On the same date, the 
European Council concluded that Russia’s war of aggression against Ukraine and its 
repercussions  for European and global security in  a changing  environment  constitute 
an existential challenge for the European Union. 

Despite ongoing international efforts to broker a peaceful resolution to the conflict, the 
prolongation  of  Russia's  war  of  aggression  has  resulted  in  significant  damage  to 
Ukraine's  critical  defence,  civilian  and  energy  infrastructure,  necessitating  the 
mobilisation  of  substantial  additional  resources  to  address  the  country's  immediate 
financing needs.  

 Russia’s war of aggression against Ukraine represents a strategic geopolitical threat to 
the  Union  as  a  whole  and  requires  Member  States  to  stand  strong  and  united.  It  is 
therefore  essential  that  Union  support  be  deployed  rapidly  and  be  able  to  adapt 
flexibly  for  immediate  relief  and  short-term  rehabilitation  on  the  way  to  future 
reconstruction. 

In line with  the Articles on the Responsibility of States for Internationally Wrongful 
Acts and customary international law, Russia – as the responsible state – is under an 
obligation to make full reparation for the injury caused by its war of aggression. 

In  its  conclusions  of  27  June  2024,  17  October  2024  and  19  December  2024,  the 
European Council has stated that, subject to Union law, Russia’s assets should remain 
immobilised  until  Russia  ceases  its  war  of  aggression  against  Ukraine  and 
compensates it for the damage caused by this war. 

(9) 

(10) 

(11) 

(12) 

(13)  Given the financing position of Ukraine, the criticality that Ukraine has the resources 
to counter Russia’s aggression and, where possible, reconstruct, it is appropriate that 
the  Union  provide  additional  support  to  address  Ukraine's  urgent  financing 
requirements and facilitate the implementation of the IMF programme. 

important  economic  challenge.  In 

(14)  The capacity of the Union and of its Member States to provide additional funding to 
Ukraine  is  currently  limited  and  does  not  correspond  to  the  magnitude  of  the  needs. 
Mobilisation  of  additional  significant  resources  by  the  Member  States  to  be  able  to 
finance  Ukraine  would  constitute  an 
its 
Communication  of  19  March  2025,  the  Commission  invited  all  Member  States  to 
make  use  of  the  flexibility  provided  by  the  national  escape  clause  in  a  coordinated 
manner with a view to maximising the impact on the EU’s defence capabilities. So far, 
Belgium,  Bulgaria,  Czechia,  Denmark,  Germany,  Estonia,  Greece,  Croatia,  Latvia, 
Lithuania, Hungary, Poland, Portugal, Slovenia, Slovakia, and Finland have decided to 
request the activation of the clause. While such an activation constitutes an appropriate 
means  for  Member  States  to  increase  their  defence  expenditures  without  breaching 
commitments under EU fiscal rules, its effects are also limited by the fiscal constraints 
of Member States that have been seriously impacted by a succession of crises during 
the decade. 

(15)  Against this background, despite the constraints on the Union and Member States, it is 
necessary to ensure that Ukraine is provided with sufficient and continuous financial 
support  in  response  to  and  following  the  current  crisis  situation.  To  that  end,  it  is 
appropriate to  establish  an instrument  for providing  Union support to  Ukraine in  the 
form of a loan to be repaid by reparations due by Russia (the ‘Reparations Loan’). 

(16)  The Reparations Loan should provide financial assistance to Ukraine in a predictable, 
continuous, orderly, flexible and timely manner with a view of supporting Ukraine in 

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covering  its  financing  and  defence  needs,  in  particular  those  resulting  from  Russia’s 
war of aggression. Specifically, the Reparations Loan should support macro-financial 
stability  in  Ukraine  and  ease  its  external  financing  and  support  Ukraine’s  defence 
industrial  capacities  through  economic,  financial  and  technical  cooperation,  thereby 
contributing to providing Ukraine a Qualitative Military Edge. 

(17)  The Reparations Loan should, subject to conditions, provide support to Ukraine in the 
form  of  a  loan  of  up  to  EUR  210  000  000  000.  In  view  of  the  principle  of  sound 
financial  management,  the  Reparations  Loan  should  be  made  available  by  the 
Commission in instalments, which may be disbursed in one or more tranches. 

(18) 

 The support to Ukraine  under the Reparations Loan should be made available under 
the  precondition  that  Ukraine  continues  to  uphold  and  respect  effective  democratic 
mechanisms, including a multi-party parliamentary system and the rule of law, and to 
guarantee respect for human rights, including those of persons belonging to minorities. 
Upholding and respecting the rule of law should include the fight against corruption. 

(19)  The financial and economic assistance available under the Reparations Loan should be 
made  accessible  to  Ukraine  in  line  with  its  financing  needs.  To  that  end,  Ukraine 
should submit a Ukrainian Financing Strategy on its financing needs and sources. That 
Ukrainian  Financing  Strategy  should  contain  the  main  information  on  Ukraine’s 
budget,  financial  and  economic  situation,  as  well  as  the  support  that  Ukraine  is 
receiving from the international community. 

(20)  The Commission should assess the Ukrainian Financing Strategy without undue delay 
and  should  act  in  close  cooperation  with  Ukraine.  Given  the  significant  scale  of 
Ukraine’s  needs  for  both  budget  assistance  and  assistance  for  defence  industrial 
capacities, as well as the constraints that some external partners have on the provision 
of  their  support,  it  is  appropriate  to  establish  an  indicative  distribution  of  the 
Reparations  Loan  between  those  two  financing  needs.  That  distribution  should  be 
indicative  in  order  to  reflect  changing  circumstances  that  may  impact  Ukraine’s 
financing  needs  and  to  ensure  that  those  needs  continue  to  be  addressed  in  a 
predictable, continuous,  orderly, flexible and timely manner. In its  assessment of the 
Ukrainian Financing Strategy, the Commission should consider the consistency of the 
expected external financing gap with that indicative distribution. 

(21) 

In  view  of  the  importance  of  the  financial  effects  of  the  measures  imposed, 
implementing  powers  should  be  conferred  on  the  Council  which  should  act  on  the 
basis  of  a  Commission  proposal.  The  Council  should  approve  the  assessment  of  the 
Ukrainian Financing Strategy by means of an implementing decision, which it should 
endeavour  to  adopt  without  undue  delay  from  the  adoption  of  the  proposal.  That 
implementing  decision  should  determine  the  amount  of  assistance  to  be  made 
accessible  to  Ukraine  to  assist  in  the  implementation  of  the  Ukrainian  Financing 
Strategy,  including  the  amount  for  budget  assistance  and  the  amount  for  supporting 
Ukraine’s  defence  industrial  capacities.  That  implementing  decision  should  also 
establish  the  maximum  number  and  indicative  value  of  instalments  for  the  budget 
assistance. In view of the principle of sound financial management and to facilitate the 
Ukrainian authorities’ liquidity management and ensure predictability, there should, in 
principle, be a maximum of four instalments of that budget assistance. Exceptionally, 
in  respect  to  the  support  available  exclusively  to  maintain  the  ERA  Loans  initiative, 
where all undesignated support under the Reparations Loan has been made available 
by  means  of  a  Council  implementing  decision,  the  Union  should  make  available  the 

EN 

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remaining designated budget assistance in accordance with the modalities agreed in a 
memorandum of understanding between the Commission and Ukraine (the ‘MoU’). 

(22)  Financial  and  economic  assistance  in  the  form  of  budget  assistance  should  be  made 
available  in  view  of  supporting  Ukraine  in  covering  its  financing  needs.    To  ensure 
flexibility  in  addressing  those  needs,  it  is  appropriate  to  use  multiple  means  of 
delivery,  where  support  should  be  able  to  be  provided  through  macro-financial 
assistance and through a loan to be implemented pursuant to Chapter III of the Ukraine 
Facility. 

(23)  Chapter III of the Ukraine Facility provides for financing to Ukraine upon satisfactory 
fulfilment of the conditions laid down in the Ukraine Plan, which sets out the reform 
and  investment  agenda  of  Ukraine.  As  a  medium-term  instrument  that  has  the 
objective  to  support  Ukraine’s  recovery  and  reconstruction,  gradual  integration  into 
the  internal  market,  as  well  as,  inter  alia,  the  adoption  and  implementation  of  the 
political,  institutional,  legal,  administrative,  social  and  economic  reforms  required  to 
align to Union values and to progressively align to Union rules, standards, policies and 
practices (‘acquis’) with a view to future Union membership, thereby contributing to 
mutual  stability,  security,  peace,  prosperity  and  sustainability,  it  is  appropriate  to 
provide  for  amounts  stemming  from  the  Reparations  Loan  to  be  utilised through  the 
Ukraine  Facility.  The  Ukraine  Plan  should  be  updated  to  reflect  these  additional 
amounts,  including  measures  to  strengthen  the  rule  of  law  and  the  fight  against 
corruption. Amendments to the Ukraine Facility to allow for these additional amounts 
to be implemented through that instrument should be undertaken. 

(24)  Macro-financial  assistance  should  be  linked  to  policy  conditions  to  be  set  out  in  the 
MoU.  The  MoU  should  include  commitments  by  Ukraine  as  appropriate,  including 
those  to  strengthen  revenue  mobilisation,  improve  the  sustainability  and  quality  of 
public expenditure and enhance the efficiency, transparency and accountability of the 
public finance management systems. Such macro-financial assistance may be used by 
Ukraine to assist in the financing of compensation, as a form of reparations, to those 
individuals  who  have  suffered  damage  from  the  illegal  actions  of  Russia,  including 
through  the  Claims  Commission  for  Ukraine  established  under  the  auspices  of  the 
Council of Europe. 

(25) 

In order to ensure uniform conditions for the implementation of this Regulation, and 
for  reasons  of  efficiency,  the  Commission  should  be  empowered  to  negotiate  such 
conditions for the macro-financial assistance with the Ukrainian authorities under the 
supervision  of  the  committee  of  representatives  of  the  Member  States  in  accordance 
with Regulation (EU) No 182/2011 of the European Parliament and of the Council19. 
Considering  the  potentially  significant  impact  of  assistance,  it  is  appropriate  that  the 
examination  procedure  as  specified  in  Regulation  (EU)  No  182/2011  be  used. 
Considering  the  amount  of  the  Reparations  Loan  to  Ukraine,  the  examination 
procedure  should  apply  to  the  adoption  of  the  MoU,  and  to  any  reduction  or 
cancellation of the Reparations Loan. 

(26)  The Reparations Loan should provide financial and economic assistance to Ukraine as 
a country at war, the financial stability of which is intrinsically linked to and depends 

19 

EN 

Regulation  (EU)  No  182/2011  of  the  European  Parliament  and  of  the  Council  of  16  February  2011 
laying down the rules and general principles concerning mechanisms for control by the Member States 
(OJ  L  55,  28.2.2011,  p.  13, 
of 
ELI: http://data.europa.eu/eli/reg/2011/182/oj). 

the  Commission’s  exercise  of 

implementing  powers 

5 

  EN 

 
on  its  ability  to  defend  itself  against  the  aggression.  This  justifies  that  a  specific 
amount  of  the  financial  and  economic  assistance  to  Ukraine  is  used  to  increase 
Ukraine’s  capacity  to  cope  with  budgetary  needs  in  relation  with  the  capacity  of  the 
country  to  strengthen  its  defence  and  military  capabilities,  thereby  contributing  to 
providing Ukraine a Qualitative Military Edge. This financial and economic assistance 
should  aim  at  enabling  Ukraine  to  carry  out  urgent  and  major  public  investments  in 
support  of  the  Ukrainian  defence  industry  and  its  integration  into  the  European 
defence  industry  in  response  to  and  following  the  current  crisis  situation.  This 
assistance  should  contribute,  in  particular,  to  the  reconstruction,  recovery  and 
modernisation  of  the  Ukrainian  Defence  Technological  and  Industrial  Base,  with  a 
view  to  increasing  its  defence  industrial  readiness,  taking  into  account  its  gradual 
future  integration  into  the  European  Defence  Technological  and  Industrial  Base  and 
through support for the timely availability of defence products and other products for 
defence purposes, through cooperation between the Union and Ukraine. 

(27)  Financial  and  economic  assistance  to  support  Ukraine’s  defence  industrial  capacities 
should be made available for activities, expenditures and measures related to defence 
products or other products for defence purposes that meet certain eligibility criteria. In 
order  to  urgently  reinforce  the  Ukrainian  defence  industrial  base  in  an  efficient  and 
autonomous  manner,  those  eligibility  criteria  should  be  structured  in  a  manner  that 
directs  the  activities,  expenditures  and  measures  to  support  Ukraine’s  defence 
industrial  capacities  towards  the  reconstruction,  recovery  and  modernisation  of  the 
Ukrainian Defence Technological and Industrial Base, taking into account its gradual 
future  integration  into  the  European  Defence  Technological  and  Industrial  Base.  In 
that context, when examining whether manufacturers are controlled by third countries 
or  third-country  entities,  control  should  be  understood  as  the  ability  to  exercise  a 
decisive  influence  over  a  legal  entity,  directly  or  indirectly,  through  one  or  more 
intermediate legal entities. 

(28) 

In order to allow Ukraine to use the financial and economic assistance in the way that 
is  the  most  adapted  to  the  circumstances,  it  is  appropriate  to  allow  it  to  employ  the 
funds  to  support  Ukraine’s  defence  industrial  capacities  by  different  implementation 
methods that reflect the diversity of the needs. In particular, it is appropriate that the 
funds  are  utilised  to  support  activities,  expenditures  and  measures  in  countries  or  in 
cooperation  with  countries  that  are  actively  supporting  Ukraine  and  the  Ukrainian 
Defence  Technological  and  Industrial  Base.  The  funds  may  also  contribute  to  the 
Ukraine  Support  Instrument  under  Regulation  (EU)  [the  EDIP  Regulation],  the 
Ukraine Investment Framework established by the Ukraine Facility for dual-use goods 
or other Union programmes. Moreover, the funds should allow Ukraine to engage in a 
massive intervention in the demand of defence products in order to create the suitable 
conditions  to  incentivise  massive  investments  in  the  ramp  up  of  the  production 
capacity and in the development of new products. To this purpose, Ukraine should be 
allowed  to  use  the  funds  to  launch  massive  procurements  of  defence  products  made 
from  the  Ukrainian  Defence  Technological  and  Industrial  Base  and  the  European 
Defence  Technological  and  Industrial  Base  via  procurements  under  the  SAFE 
Instrument set out by Council Regulation (EU) 2025/110620 or, subject to validations, 
under other modalities. 

20 

Council  Regulation  (EU)  2025/1106  of  27  May  2025  establishing  the  Security  Action  for  Europe 
(SAFE)  through  the  Reinforcement  of  the  European  Defence  Industry  Instrument  (OJ  L,  2025/1106, 
28.5.2025, ELI: http://data.europa.eu/eli/reg/2025/1106/oj). 

EN 

6 

  EN 

 
(29)  To ensure a smooth implementation of this Regulation in conjunction with the SAFE 
Instrument, it is appropriate to apply similar eligibility conditions. Taking into account 
the fact that Ukraine is a country at war whose capacity to defend its territory might 
depend  on  the  availability  of  a  given  product  at  very  short  term,  Ukraine  should  be 
allowed  to  procure  products  which  do  not  comply  with  these  eligibility  conditions 
where  there  is  an  urgent  need  for  a  product  and  where  no  alternative  product  is 
available  by  procurement.  Directive  2009/81/EC  of  the  European  Parliament  and  of 
the  Council21  concerns,  amongst  other  things,  the  establishment  of  an  appropriate 
legislative framework, which is a prerequisite for the creation of a European defence 
equipment  market,  on  the  coordination  of  procurement  procedures  for  the  award  of 
contracts  to  meet  the  security  requirements  of  Member  States  and  the  obligations 
arising  from  the TFEU. However, it is  not adapted to  satisfy the urgent and massive 
needs of a country at war at the borders of the Union. In these circumstances, it might 
be appropriate to open an existing framework agreement to contracting authorities of 
Ukraine even if they were not originally party to it and if that possibility had not been 
provided for in the original framework agreement.  

(30)  The  overall  architecture  of  the  financial  and  economic  assistance  depends  on  the 
contribution by different parties to support Ukraine in meeting its financing needs. As 
a  result,  it  is  appropriate  that  the  financial  and  economic  assistance  to  support 
Ukraine’s  defence  industrial  capacities  allows  Ukraine  to  cooperate  with  third 
countries that are also supporting Ukraine’s defence industrial capacities. Specifically, 
it should be possible for Ukraine to use the assistance to support its defence industrial 
capacities  to  cooperate  with  such  countries  that  do  not  contravene  the  security  and 
defence  interests  of  the  Union  and  its  Member  States,  provided  that  such  countries 
provide  sizeable  additional  support  to  Ukraine  that  can  be  used  for  expenditure  that 
contributes  to  the  aims  of  the  support  to  Ukraine’s  defence  industrial  capacities  and 
that  such  expenditure  is  open  to  participation  by  both  European  and  Ukrainian 
industry.  Under  the  assistance  to  support  Ukraine’s  defence  industrial  capacities, 
Ukraine should take appropriate steps to ensure that funds are not utilised in countries 
that are not supporting Ukraine, which would as such not contribute to the aim of the 
assistance. 

(31)  This  Regulation  is  without  prejudice  to  applicable  international  law  prohibiting  the 
use, development or production of certain defence products and technologies.  

(32)  The  implementation  of  the  assistance  to  support  Ukraine’s  defence  industrial 
capacities  should  be  carried  out  in  line  with  the  principles  of  sound  financial 
management ensuring the protection of the financial interests of the Union as set out in 
Article  223(4)  of  Regulation  (EU,  Euratom)  2024/2509  of  the  European  Parliament 
and  the  Council22.  Detailed  requirements  in  this  respect  might  be  entered  into  an 
arrangement to be signed between the Commission and Ukraine. Furthermore, for the 
management  of  the  financial  and  economic  assistance  received  to  support  Ukraine’s 

21 

22 

Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 on the coordination 
of  procedures  for  the  award  of  certain  works  contracts,  supply  contracts  and  service  contracts  by 
contracting  authorities  or  entities  in  the  fields  of  defence  and  security,  and  amending  Directives 
2004/17/EC and 2004/18/EC (OJ L 216, 20.8.2009, p. 76, ELI: http://data.europa.eu/eli/dir/2009/81/oj). 
Regulation  (EU,  Euratom)  2024/2509  of  the  European  Parliament  and  of  the  Council  of  23  September 
2024 on the financial rules applicable to the general budget of the Union (OJ L, 2024/2509, 26.9.2024, 
ELI: http://data.europa.eu/eli/reg/2024/2509/oj). 

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7 

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defence  industrial  capacities,  Ukraine  should  open  a  single  account  via  which  to 
manage the assistance, where the Commission should be able to monitor that account. 

(33)  To  support  the  implementation  of  assistance  to  support  Ukraine’s  defence  industrial 
capacities,  the  Commission  should  establish  the  Ukraine’s  Defence  Industrial 
Capacities  Expert  Group.  That  Expert  Group  should  advise  the  Commission  on 
matters related to the assistance to support Ukraine’s defence industrial capacities. 

(34)  The  Commission  should  monitor  the  implementation  of  assistance  to  support 
Ukraine’s defence industrial capacities, notably including the delivery of products. To 
that end, various monitoring arrangements should be established to reflect the different 
methods of implementation. 

(35)  Directive  2009/81/EC  concerns,  amongst  other  things,  the  establishment  of  an 
appropriate legislative framework on the coordination of procurement procedures for 
the  award  of  contracts  to  meet  the  security  requirements  of  Member  States  and  the 
obligations  arising  from  the  TFEU.  To  achieve  that  aim,  that  Directive  2009/81/EC 
caters,  in  particular,  for  addressing  crisis  situations,  notably  by  providing  specific 
provisions  applicable  in  cases  of  urgency  resulting  from  a  crisis,  such  as  shortening 
periods  for  the  receipt  of  tenders  and  the  possibility  to  use  the  negotiated  procedure 
without  prior  publication  of  a  contract  notice.  However,  in  certain  cases  of  urgency, 
those rules might be insufficient, especially where the urgency resulting from the crisis 
can be addressed only by having Ukraine and at least one Member State engaging in a 
common procurement. In those cases, often the only solution that ensures the security 
interests of those countries is to open an existing framework agreement or contract of a 
Member State to contracting authorities of Ukraine that was not originally party to it, 
even  though  that  possibility  had  not  been  provided  for  in  the  original  framework 
agreement or contract. As those possibilities are not foreseen in Directive 2009/81/EC 
at  the  moment  of  the  entry  into  force  of  this  Regulation,  the  latter  provides  for  the 
possibility  to  complement  or  derogate  from  the  provisions  of  that  Directive  in  the 
current crisis situation stemming from the war of aggression of Russia, provided that 
the  agreement  of  the  undertaking  which  concluded  the  framework  agreement  is 
obtained.  With  respect  to  additional  quantities  for  Ukraine,  Ukrainian  contracting 
authorities should enjoy the same conditions as the original contracting authority that 
concluded  the  original  framework  agreement.  In  addition,  appropriate  transparency 
measures should be taken to ensure that all potentially interested parties are informed. 

(36)  Council  Regulation  (EU)  2025/1106  provides  for  financial  assistance  to  Member 
States, enabling them to carry out urgent and major public investments in support of 
the  European  defence  industry  in  response  to  the  crisis  situation  resulting  from  the 
stark  deterioration  in  the  Union’s  security  context.  With  that  instrument,  the  Union 
started  to  support  Member  States  so  that they  can  place  orders  rapidly,  incentivising 
the defence industrial sector to invest, in the very short term, in the strengthening of 
production  capacities  in  order  to  be  able  to  serve  Member  States  needs  by  2030.  In 
addition,  this  Regulation  supports  the  placement  of  Ukrainian  orders  with  the 
European  Defence  Technological  and  Industrial  Base  in  order  to  support  the 
cooperation between the European Defence Technological and Industrial Base and the 
Ukrainian  Defence  Technological  and  Industrial  Base.  Such  an  exceptionally  high 
demand  for  a  wide  range  of  defence  products  carries  an  imminent  risk  of  a  severe 
negative impact on the proper functioning of the internal market.  In order to address 
this  risk  and  in  view  of  the  objectives  of  this  Regulation,  taking  into  account  the 
specific situation of Ukraine, prioritisation measures at Union level that aim to ensure 
the availability of the defence products concerned could prove to be indispensable in 

EN 

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ensuring  the  proper  functioning  of  the  internal  market  for  defence  products  and  its 
supply chains. The Commission should be able to use in this respect, upon a request of 
a Member State, priority-rated requests for facilitating the supply of defence products 
to meet the objectives of this Regulation. 

(37)  Priority-rated  requests  should  consist  of  requests  by  the  Commission,  upon  an 
initiative of a Member State, to relevant economic operators established in the Union 
to  accept  or  to  prioritise  orders  of  crisis-relevant  products.  Only  to  be  used  when 
necessary and proportionate for the purpose of ensuring that defence supply chains can 
operate normally, those priority-rated requests should be aimed at supporting Ukraine 
which faces severe difficulties either in the placing of an order or in the execution of a 
contract  for  the  supply  of  defence  products.  Economic  operators  should  have  the 
possibility  to  refuse  to  be  subject  to  a  priority-rated  request.  A  priority-rated  request 
should  be  taken  based  on  objective,  factual,  measurable  and  substantiated  data.  It 
should  have  regard  for  the  legitimate  interests  of  the  undertakings  and  the  cost  and 
effort required for any change in production sequence. When accepted, the obligation 
to  perform  the  priority-rated  request  should  take  precedence  over  performance 
obligations  under  private  or  public  law.  In  light  of  the  importance  of  ensuring  the 
supply of defence products, which are indispensable to the correct functioning of the 
internal  market  and  its  supply  chains,  compliance  with  the  obligation  to  perform  a 
priority-rated request should not entail liability to third parties for damages that might 
result  from  any  breach  of  contractual  obligations  governed  by  the  law  of  a  Member 
State,  to  the  extent  that  the  breach  of  contractual  obligations  was  necessary  for 
compliance  with  the  mandated  prioritisation.  Where  the  economic  operator  has 
expressly  accepted  a  priority-rated  request  and  the  Commission  has  adopted  an 
implementing act following such an acceptance, the economic operator should comply 
with  all  the  conditions  of  that  implementing  act.  Non-compliance  by  the  economic 
operator with the conditions laid down in the implementing act should result in a loss 
of  the  benefit  of  a  waiver  of  contractual  liability.  Where  the  non-compliance  is 
intentional  or  attributable  to  gross  negligence,  the  Commission  should  be  able  to 
impose on the economic operator a fine, subject to the proportionality principle. 

(38)  Given  that  specific  amounts  should  be  made  available  for  budget  assistance  and 
industrial  capacities,  coherence  and 

assistance 
complementarity should be ensured in their respective implementation. 

to  support  Ukraine’s  defence 

(39)  This Regulation should apply without prejudice to the specific character of the security 

and defence policy of certain Member States. 

(40)  The  Reparations  Loan  Agreement  to  be  concluded  between  the  Commission  and  the 
Ukrainian authorities should contain provisions aligned with the rights, responsibilities 
and  obligations  provided  for  in  the  framework  agreement  under  the  Ukraine  Facility 
referred  to  in  Article  9  of  Regulation  (EU)  2024/792  signed  between  the  Union  and 
Ukraine  that  entered  into  force  on  20  June  2024.  That  will  ensure  that  the  Union’s 
financial interests linked to  the Reparations Loan are protected efficiently, providing 
the  appropriate  measures  relating  to  the  prevention  of,  and  fight  against,  fraud, 
corruption  and  any  other  irregularities  linked  to  the  assistance.  It  will  also,  in 
accordance with Regulation (EU, Euratom) 2024/2509, grant the necessary rights and 
access  to  the  Commission,  the  European  Anti-Fraud  Office  (OLAF),  the  European 
Court  of  Auditors  and,  where  applicable,  the  European  Public  Prosecutor’s  Office, 
including from third parties involved in the implementation of Union funds during and 
after  the  availability  period  of  the  Reparations  Loan.  Ukraine  should  also  report 

EN 

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irregularities  in  relation  to  the  use  of  the  funds  to  the  Commission,  in  line  with  the 
procedures provided for in the framework agreement under the Ukraine Facility. 

(41) 

In  accordance  with  Article  223(4)  of  Regulation  (EU,  Euratom)  2024/2509,  the 
Reparations Loan Agreement should ensure that  all costs incurred by  the Union that 
relate  to  the  Reparations  Loan  are  borne  by  Ukraine,  including,  where  applicable, 
costs of exchanges to and from foreign currencies. 

(42)  Given the difficult  situation of Ukraine caused by Russia’s war of aggression  and in 
order to support Ukraine on its long-term stability path, it is appropriate for the Union 
to  provide  the  Reparations  Loan  to  Ukraine  as  a  limited  recourse  loan  that  is  to 
become  due  and  payable  when  Ukraine  receives  from  Russia  cash  or  non-monetary 
assets for war reparations, indemnities or any financial settlement from Russia, other 
than territory.  

(43)  The release of funds under the Reparations Loan should be contingent on the positive 
assessment by the Commission  of a request  for  funds submitted by Ukraine. For the 
macro-financial  assistance,  the  assessment  of  the  conditions  should  be  without 
prejudice  to  the  assessment  of  the  fulfilment  of  conditions  under  other  Union 
programmes  and  instruments.  For  the  assistance  to  support  Ukraine’s  defence 
industrial capacities, the release of funds should be linked to contracts or agreements 
for  activities,  expenditures  and  measures  to  support  Ukraine’s  defence  industrial 
capacities related to defence products or other products for defence purposes. 

(44)  This  Regulation  should  lay  down  appropriate  provisions  for  the  financing  of  the 

Reparations Loan. 

(45)  The devastating impact of Russia’s war of aggression against Ukraine has significant 
spill-over  effects  for  the  Union,  including  through  threats  to  its  external  borders, 
cyber-  and  hybrid-attacks,  energy  and  transport  disruptions,  forced  migration  and 
destabilisation  of  its  eastern  neighbourhood,  thereby  affecting  the  security,  defence 
and economic interests of the Union and its Member States. The crisis resulting from 
Russia’s war of aggression against Ukraine has not only demonstrated shortfalls in the 
Union’s and Ukraine’s defence industrial sector, but also that the security of Ukraine 
and  that  of  the  Union  are  inseparably  linked,  and  that  the  Union’s  own  peace, 
prosperity  and  resilience  depend  on  Ukraine’s  ability  to  defend  its  sovereignty  and 
territorial  integrity.  Therefore,  the  Union  needs  to  provide  itself  with  the  means  to 
strengthen  its  collective  defence  and  resilience  and  to  continue  supporting  Ukraine. 
Financial  resources  on  an  exceptional  scale  are  required  in  order  to  address  the 
consequences  of  Russia’s  war  of  aggression  against  Ukraine  without  increasing  the 
pressure  on  the  finances  of  the  Member  States.  An  exceptional  response  should 
therefore take place at Union level. For that reason, it is appropriate to empower the 
Commission on an exceptional basis to borrow the necessary cash balances at financial 
institutions in the Union that accumulate because transactions regarding the assets and 
reserves of the Central Bank of Russia are not permitted, which would be exclusively 
used to  fund the Reparations Loan to  Ukraine for the sole purpose of addressing the 
consequences of Russia’s was of aggression against  Ukraine.  That  borrowing should 
be done in a manner that fully protects the financial position of the relevant financial 
institution  and  enables  them  to  honour  all  contractual  commitments  related  to  the 
assets and reserves of the Central Bank of Russia. 

(46)  These  specific  measures  are  without  prejudice  to  the  claim  of  the  Central  Bank  of 
Russia.  That  asset  is  not  impacted  by  the  measures  provided  under  this  Regulation. 
The  cash  balances  accumulating  on  the  balance  sheets  of  financial  institutions  as  a 

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result  of the immobilisation  do not  belong  to  the Central  Bank of Russia and do not 
constitute sovereign assets. 

(47)  Given  that  some  of  the  cash  balances  at  financial  institutions  in  the  Union  that 
accumulate because transactions regarding the assets and reserves of the Central Bank 
of Russia are not permitted are in currencies other than euro, it is appropriate to permit 
the Union to have the possibility to both borrow and lend in those currencies. 

(48)  Due to the unique funding method of the Reparations Loan, its funding should be kept 
separate  from  the  funding  of  other  Union  programmes.  Specifically,  the  diversified 
funding strategy in Article 224 of Regulation (EU, Euratom) 2024/2509 should not be 
used for the funding of the Reparations Loan. 

(49)  As  the  cash  balances  of  financial  institutions  that  are  utilised  to  finance  the 
Reparations  Loan  may  no  longer  generate  interest  for  the  respective  financial 
institution,  it  is  appropriate  that  a  share  of  the  Reparations  Loan  is  dedicated  to 
maintaining the G7 ERA Loans initiative.  

(50)  The  significant  impact  of  Russia’s  war  of  aggression  on  the  European  security 
architecture  also  calls  for  collective  contributions  by  Member  States  in  the  form  of 
guarantees supporting the Reparations Loan from the Union budget. Those guarantees 
are necessary to enable the Union to grant a Reparations Loan to Ukraine and to cover 
for the risk of Russian Central Bank assets being released in the absence of reparations 
paid  by  Russia  to  Ukraine.  To  ensure  that  the  contingent  liability  arising  from  the 
Reparations Loan provided by the Union to Ukraine is compatible with the applicable 
multiannual financial framework referred to in Article 312 TFEU and own resources 
ceilings  referred  to  in  the  third  paragraph  of  Article  311  TFEU,  the  guarantees 
provided by the Member States should be irrevocable, unconditional, and on demand, 
while additional safeguards should enhance the robustness of the system.  

(51)  The Commission should call for funds on the financial institutions who are holding the 
cash balances and should issue a debt instrument specifying, in particular, the interests 
and  maturity.  It  should  also  be  possible  to  agree  on  arrangements  specifying,  in 
particular,  the  modalities  of  the  call  for  funds  and  repayment  of  the  Union  which 
should  take into  account due  considerations of the Union  as an issuer on the market 
and the liquidity needs of the financial institutions. Such considerations might specify 
conditions for the use of cash equivalent if provided by the Union. The arrangements 
might  also  include  cost  coverage  or  compensations  for  the  financial  institutions  for 
costs incurred in relation of the provision of the funds.  

(52) 

It is essential to provide for measures allowing the Union to repay the debt instrument 
with the financial institutions in a short period of time, should such need arise. As part 
of those measures, a Union liquidity mechanism to ensure that the necessary resources 
are available in time to repay the debt contract should be established. That mechanism 
should  be  strictly  used  for  the  purposes  of  timely  repayment  of  Union  obligations 
towards financial institutions. The Union liquidity mechanism should be based on the 
authorisation  of  the  Commission  to  carry  out  operations  as  part  of  the  diversified 
funding  strategy  referred  to  in  Article  224  of  Regulation  (EU,  Euratom)  2024/2509, 
and  in  particular  the  liquidity  management  operations  available  thereunder.  Those 
operations should comprise wide range of measures allowing the Commission to raise 
liquidity  within  the  required  timeframe  and  the  possibility  to  issue  Union  debt 
securities.  Those  operations  should  respect  the  budgetary  limits  under  the  own 
resources ceilings and multiannual financial framework. 

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(53)  After the necessary provisions are established under the system of own resources and 
the  multiannual  financial  framework,  the  coverage  for  the  reparations  loan  and  the 
Union liquidity mechanism should be ensured by the Union budget. Until the coverage 
through the Union budget  is  ensured, the  Union liquidity  mechanism should  only  be 
used  to  ensure  the  call  on  guarantee  is  honoured  in  full  and  in  time.  The  Member 
States should identify cash resources which they would bring forward, while for any 
gap  the  Union  liquidity  mechanism  should  be  deemed  requested  by  the  Member 
States. The repayment of the Union liquidity mechanism by the Member States for the 
principal and the interest rates should be integrated into the guarantees in line with the 
conditions  set  out  in  Article  223  of  Regulation  (EU,  Euratom)  2024/2509,  and 
therefore the guarantee set out in Article 2(3) of Regulation (EU, Euratom) 2020/2053 
should apply to the repayment of the Union liquidity mechanism.  

(54) 

(55) 

In  line  with  Article  21(2)(a)  of  Regulation  (EU,  Euratom)  2024/2509,  the  Member 
States may provide voluntary contributions for the implementation of the Reparations 
loan. Those contributions could, inter alia, contribute to the coverage of any interests 
due when implementing the debt instrument. 

It  should  be  possible  for  third  countries  or  other  sources  to  contribute  to  the 
Reparations Loan by providing irrevocable, unconditional and on-demand guarantees 
over  and  above  the  guarantees  provided  by  Member  States.  Alternatively,  third 
countries  may  contribute  to  the  Reparations  Loan  by  supporting  currency  risk 
management related to conversion of funds borrowed from financial institutions. Such 
contributions  should  constitute  external  assigned  revenue  in  accordance  with  Article 
21(2), points (a), (d) and (e), of Regulation (EU, Euratom) 2024/2509. 

(56)  By way of derogation from Article 31(3) of Regulation (EU) 2021/94723, the financial 
liability  from  loans  under  this  Regulation  should  not  be  supported  by  the  External 
Action Guarantee, established by that Regulation. Support in form of loans under this 
Regulation should constitute financial assistance within the meaning of Article 223(1) 
of  Regulation  (EU,  Euratom)  2024/2509.  In  considering  the  financial  risks  and  the 
presence  of  guarantees,  no  provisioning  should  be  constituted  for  the  support  in  the 
form of loans under this Regulation, to be guaranteed over and above the ceilings, and, 
by way of derogation from Article 214(1) of Regulation (EU, Euratom) 2024/2509, no 
provisioning rate should be set. 

(57)  Where  Member  States  are  confronted  with  arbitral  awards  rendered  against  them  in 
investor-State  dispute  settlement  proceedings  in  connection  with  measures  imposed 
under  Regulation  (EU)  No  833/2014  or  Regulation  (EU)  No  [the  122  Regulation], 
they  should  as  a  matter  of  sincere  cooperation  minimise  financial  and  legal  risks 
linked  to  the  application  of  this  Regulation.  They  should  invoke  any  objection 
available  to  them  in  domestic  or  foreign  proceedings  for  the  recognition  and 
enforcement of such awards. This includes raising the objection that the recognition or 
enforcement of the award would be contrary to the public policy of the country where 
recognition and enforcement is sought, pursuant to the Convention on the Recognition 
and  Enforcement  of  Foreign  Arbitral  Awards  of  1958,  as  well  as  other  available 

23 

Regulation (EU) 2021/947 of the European Parliament and of the Council of 9 June 2021 establishing 
the  Neighbourhood,  Development  and  International  Cooperation  Instrument  –  Global  Europe, 
amending and repealing Decision No 466/2014/EU of the European Parliament and of the Council and 
repealing  Regulation  (EU)  2017/1601  of  the  European  Parliament  and  of  the  Council  and  Council 
Regulation  (EC,  Euratom)  No  480/2009  (Text  with  EEA  relevance) (OJ  L 209,  14.6.2021, p.  1,  ELI: 
http://data.europa.eu/eli/reg/2021/947/2021-06-14). 

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objections based on national, Union or international law. Furthermore, Member States 
should  ensure  that  such  arbitral  awards  are  not  to  be  recognised  and  enforced  in  the 
Union. 

(58)  Where a Member State suffers damage as a result of an enforcement in a third country 
of  investor-State  arbitral  awards  in  connection  with  measures  imposed  under 
Regulation (EU) No 833/2014 or Regulation (EU) No [the 122 Regulation], the Union 
should  ensure  fair  sharing  and  solidarity  with  that  Member  State  through  the 
conclusion  of  guarantee  agreements  with  Member  States  covering  the  risk  of  such 
damages. This mechanism of fair sharing and solidarity should be construed so as to 
avoid double payment to the Central Bank of Russia when the transaction prohibition 
is lifted. If amounts are called under these guarantees, the amount due by the Union to 
financial  institutions  should  be  reduced  by  an  equivalent  amount.  In  line  with 
Regulation (EU) No 833/2014 or Regulation (EU) No [the 122 Regulation], financial 
institutions should then reduce their liabilities towards the Central Bank of Russia for 
an equivalent amount. Until the necessary provisions are established under the system 
of  own  resources  and  the  multiannual  financial  framework,  that  mechanism  of  fair 
sharing  and  solidarity  should  take  into  consideration  those  Member  States  that  have 
participated in solidarity by sharing risk under the Reparations Loan. 

(59)  The  bilateral  investment  treaties  concluded  between  certain  Member  States  and  the 
Russian Federation are not consistent with the investment protection policy developed 
by the Union pursuant to Article 207 TFEU since the entry into force of the Treaty of 
Lisbon.  The  Member  States  concerned  are  to  withdraw  from  or  terminate,  as 
appropriate, those bilateral investment treaties and adopt a common attitude to achieve 
this. The Commission should facilitate the coordination of the Member States.  

(60)  Union  support  to  Ukraine  under  this  Regulation  should  be  managed  by  the 

Commission. 

(61)  The  assistance  to  Ukraine  under  the  Reparations  Loan  should  be  additional  and 
complementary  to  the  Union  support  provided  under  the  Ukraine  Facility.  The 
Commission  should,  wherever  possible,  seek  to  minimise  the  administrative  and 
reporting burden on Ukraine. 

(62)  The Commission should duly take into account Council Decision 2010/427/EU24 and 
the role of the European External Action Service, in line with their competences. 

(63)  The competent committee of the European Parliament might invite the Commission to 
discuss in a Reparations Loan dialogue matters that concern the implementation of the 
Regulation. The Commission should take into account elements arising from the views 
expressed through the Reparations Loan dialogue, including  the resolutions  from  the 
European Parliament if provided. 

(64) 

In order to ensure that the European Parliament and the Council are able to follow the 
implementation  of this  Regulation,  the Commission  should regularly inform them of 
developments  relating  to  Union  assistance  to  Ukraine  under  this  Regulation  and 
provide them with the relevant documents. 

(65) 

In order to ensure the continued effectiveness of the arrangements established by this 
Regulation, the Commission should regularly review their adequacy and report to the 

24 

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Council  Decision  2010/427/EU  of  26  July  2010  establishing  the  organisation  and  functioning  of  the 
ELI: 
(OJ 
European 
http://data.europa.eu/eli/dec/2010/427/oj). 

3.8.2010, 

External 

Service 

Action 

201, 

30, 

p. 

L 

13 

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European  Parliament  and  to  the  Council  thereon,  thereby  guaranteeing  transparency 
and accountability. 

(66) 

In  order  to  ensure  uniform  conditions  for  the  implementation  of  this  Regulation, 
implementing powers should be conferred on the Commission. Those powers should 
be exercised in accordance with Regulation (EU) No 182/2011. 

(67)  Since  the  objectives  of  this  Regulation,  namely  to  provide  financial  and  economic 
assistance to  Ukraine in  a predictable,  continuous, orderly and timely manner with  a 
view  to  supporting  Ukraine  in  coverings  its  financing  needs  resulting  from  Russia’s 
war  of  aggression,  cannot  be  sufficiently  achieved  by  the  Member  States  but  can 
rather,  by  reasons  of  their  scale  and  effect,  be  better  achieved  at  Union  level,  the 
Union may adopt measures, in accordance with the principle of subsidiarity as set out 
in  Article  5  of  the  Treaty  on  European  Union.  In  accordance  with  the  principle  of 
proportionality, as set out in that Article, this Regulation does not go beyond what is 
necessary in order to achieve those objectives. 

(68) 

In view of the urgency entailed by the exceptional circumstances caused by Russia’s 
unprovoked  and  unjustified  war  of  aggression,  it  is  considered  to  be  appropriate  to 
invoke the exception to the eight-week period provided for in Article 4 of Protocol No 
1 on the role of national Parliaments in the European Union, annexed to the Treaty on 
European Union, to the Treaty on the Functioning of the European Union and to the 
Treaty establishing the European Atomic Energy Community. 

(69) 

In light of the situation in Ukraine, this Regulation should enter into force as a matter 
of urgency on the day  following that of its publication in  the  Official Journal of  the 
European Union, 

HAVE ADOPTED THIS REGULATION: 

CHAPTER I 

GENERAL PROVISIONS 

Article 1 

Subject matter 

1.  This Regulation establishes an instrument for providing Union assistance to Ukraine in 

the form of a loan to be repaid by reparations due by Russia (the ‘Reparations Loan’). 

2. 

It  lays  down  the  objective  of  the  Reparations  Loan,  its  financing,  the  forms  of  Union 

funding under it and the rules for providing such funding. 

Article 2 

Objectives of the Reparations Loan 

1.  The general objective of the Reparations Loan shall be to provide financial and economic 

assistance  to  Ukraine  in  a  predictable,  continuous,  orderly,  flexible  and  timely  manner 

with a view to supporting Ukraine in covering its financing needs notably resulting from 

Russia’s war of aggression and Russia’s non-payment of reparations due. 

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2.  To achieve this general  objective, the specific objectives of the Reparations Loan shall 

be: 

a. 

to  support  macro-financial  stability  via  easing  Ukraine’s  external  and  internal 

financing constraints; 

b. 

to support Ukraine’s defence industrial capacities through economic, financial and 

technical cooperation. 

For the purposes of this Regulation the following definitions apply: 

Article 3 

Definitions 

(1) 

(2) 

(3) 

(4) 

(5) 

‘defence product’ means goods, services and works that fall within the scope of 
Directive 2009/81/EC, as set out in Article 2 thereof; 

‘designated  budget  assistance’  means  assistance  provided  in  accordance  with 
Chapter  III  that  is  designated  as  available  exclusively  to  maintain  the  ERA 
Loans initiative; 

‘EEA EFTA State’ means a Member of the European  Free Trade Association 
which is a member of the European Economic Area; 

‘ERA  Loans’  means  eligible  bilateral  loans  and  the  Union’s  Macro-financial 
Assistance loan pursuant to Regulation (EU) 2024/2773; 

‘financial institution’ means a financial sector entity as defined in Article 4 of 
Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the 
Council25, an insurance and reinsurance undertaking as defined in Article 13 of 
Directive  2009/138/EC  of  the  European  Parliament  and  of  the  Council26,  a 
central  securities  depository  as  defined  in  Article  2  of  Regulation  (EU)  No 
909/2014  of  the  European  Parliament  and  of  the  Council27  or  a  central 
counterparty  as  defined  in  Article  2  of  Regulation  (EU)  No  648/2012  of  the 
European Parliament and of the Council28; 

(6) 

‘other products for defence purposes’ means any good, service and work other 
than  those  falling  within  the  scope  of  Directive  2009/81/EC,  as  set  out  in 
Article 2 thereof, which are necessary for or aimed at defence purposes; 

25 

26 

27 

28 

Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on 
prudential  requirements  for  credit  institutions  and  amending  Regulation  (EU)  No  648/2012  (OJ  L  176, 
27.6.2013, p. 1, ELI: http://data.europa.eu/eli/reg/2013/575/oj). 
Directive  2009/138/EC  of  the  European  Parliament  and  of  the  Council  of  25  November  2009  on  the 
taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, 
p. 1, ELI: http://data.europa.eu/eli/dir/2009/138/oj). 
Regulation  (EU)  No  909/2014  of  the  European  Parliament  and  of  the  Council  of  23  July  2014  on 
improving  securities  settlement  in  the  European  Union  and  on  central  securities  depositories  and 
amending Directives 98/26/EC and 2014/65/EU and Regulation (EU) No 236/2012 (OJ L 257, 28.8.2014, 
p. 1, ELI: http://data.europa.eu/eli/reg/2014/909/oj). 
Regulation  (EU)  No  648/2012  of  the  European  Parliament  and  of  the  Council  of  4  July  2012  on  OTC 
trade  repositories  (OJ  L  201,  27.7.2012,  p.  1,  ELI: 
derivatives,  central  counterparties  and 
http://data.europa.eu/eli/reg/2012/648/oj). 

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(7) 

‘undesignated budget assistance’ means macro-financial assistance provided in 
accordance  with  Chapter  III  that  is  not  designated  as  available  exclusively  to 
maintain  the  ERA  Loans  initiative  and  assistance  in  the  form  of  a  loan  to  be 
implemented pursuant to Chapter III of Regulation (EU) 2024/792. 

Article 4 

Available assistance under the Reparations Loan 

1.  The Reparations Loan shall be for a maximum amount of EUR  210 000 000 000. That 

amount  shall  be  made  available  to  Ukraine  in  accordance  with  Ukraine’s  financing 

needs, as provided for in the Ukrainian Financing Strategy approved in accordance with 

Article 8, subject to:  

a. 

the  requirement  that  at  no  time  shall  the  outstanding  amount  of  the  loan  made 

available exceed the amount of cash balances at  financial institutions in the Union 

that  accumulate  because  transactions  regarding  the  assets  and  reserves  of  the 

Central Bank of Russia are not permitted; and 

b. 

the  entry  into  force  of  the  guarantee  agreements  referred  to  in  Article  26.  The 

amount  of  the  loan  shall  become  available  progressively,  following  the  entry  into 

force  of  each  respective  guarantee  agreement,  provided  that  no  amount  shall  be 

made available until the cumulative ceiling of the guarantees that are effective for 

each  tranche  of  the  guarantee  pursuant  to  Article  25(4)  exceeds  50%  of  the 

maximum amount of the respective tranche. The amount of the loan made available 

shall not exceed the cumulative ceiling of the guarantees that are effective pursuant 

to Article 25(4). 

2.  The Reparations Loan shall be available until 31 December 2030, with the exception of 

the designated budget assistance that shall be available until 31 December 2055. It shall 

be made available by the Commission in instalments, which may be disbursed in one or 

more tranches. The instalments or tranches may be provided in euro or currencies other 

than euro for the amounts of the cash balances in those currencies in financial institutions 

that  accrue  as  transactions  regarding  the  assets  and  reserves  of  the  Central  Bank  of 

Russia for which transactions are not permitted. 

3.  Subject  to  points  (a)  and  (b)  of  paragraph  1,  the  indicative  maximum  amount  to  be 

disbursed to Ukraine as  loan instalments by 31 December 2027 shall be up to EUR  90 

000 000 000. 

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4. 

If  the  financing  needs  of  Ukraine  decrease  fundamentally  during  the  period  of 

availability of the Reparations Loan, including in the event of a settlement by Russia of 

Ukraine’s  war  damages,  the  Commission,  acting  in  accordance  with  the  examination 

procedure  referred  to  in  Article  30(2),  may  reduce  the  undisbursed  amount  of  the 

Reparations Loan or cancel it. 

5.  Point (b) of paragraph 1 shall cease to apply if the following conditions are cumulatively 

fulfilled: 

a. 

a decision laying down the provisions relating to the system of own resources of the 

Union  referred  to  in  the  third  paragraph  of  Article  311  of  the  Treaty  on  the 

Functioning of the European Union that provides for resources allowing a guarantee 

under the Union budget for the financing referred to in Article 23 has entered into 

force and is applicable; and 

b. 

a  multiannual  financial  framework  referred  to  in  Article  312  of  the  Treaty  on  the 

Functioning  of the European Union that provides for a guarantee under the Union 

budget  of  the  Reparations  Loan  and  any  necessary  financing  of  costs  has  entered 

into force and is applicable. 

Preconditions for assistance under the Reparations Loan 

Article 5 

1.  A  precondition  for  granting  the  assistance  under  the  Reparations  Loan  shall  be  that 

Ukraine  continue  to  uphold  and  respect  effective  democratic  mechanisms,  including  a 

multi-party  parliamentary  system,  the  rule  of  law,  and  to  guarantee  respect  for  human 

rights, including the rights of persons belonging to minorities. Upholding and respecting 

the rule of law shall include the fight against corruption. 

2.  The  Commission  services  and  the  European  External  Action  Service  shall  monitor  the 

fulfilment of the precondition set out in paragraph 1, in particular before the adoption of 

the  Council  implementing  decision  referred  to  in  Article  8  and  the  release  of  funds 

referred to in Article 22. Furthermore, the monitoring shall take into account the relevant 

recommendations of international bodies, such as the Council of Europe and its Venice 

Commission. The Commission shall inform the European Parliament and the Council of 

its monitoring. 

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CHAPTER II 

IMPLEMENTATION OF THE REPARATIONS LOAN 

Article 6 

Ukrainian Financing Strategy 

1. 

In  order  to  receive  financial  and  economic  assistance  under  the  Reparations  Loan, 

Ukraine shall submit, in principle each year, to the Commission a Ukrainian Financing 

Strategy that shall provide details on Ukraine’s financing needs and financing sources, in 

principle for the forthcoming 12 months.  

2.  The Ukrainian Financing Strategy shall contain: 

a. 

the  main  macroeconomic  assumptions  underpinning  the  Ukrainian  Financing 

Strategy; 

b. 

information on Ukraine’s budget, per quarter, including: 

i. 

the  targeted  budget  balance  for  the  general  government  as  a  percentage  of 

Gross  Domestic  Product  (GDP),  broken  down  by  subsector  of  general 

government; 

ii. 

the  projections  for  expenditure  and  revenue  as  a  percentage  of  GDP  for  the 

general  government  and  its  main  subsectors,  and  their  main  components 

according to the economic classification; 

iii.  relevant  information  on  the  general  government  expenditure  by  function, 

notably on defence; 

iv.  a description and quantification of the expenditure and revenue measures to be 

included in the budget; 

v. 

an annex containing the methodology and assumptions, and any other relevant 

parameters underpinning the budgetary forecasts. 

c. 

information on Ukraine’s past and projected financial developments in the general 

government, per quarter, including: 

i. 

information  on  the  liquidity  situation  (cash  balance)  for  the  general 

government and its main subsectors; 

ii.  debt amortisations; 

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iii.  a debt issuance strategy; 

iv.  other debt creating and reducing flows. 

d. 

information  on  the  implementation  of  previously  granted  assistance  under  the 

Reparations Loan, including any financial recoveries thereof; 

e. 

information on projected in-kind military assistance; 

f. 

on the basis of Ukraine’s budget  and the projected in-kind  military assistance, the 

expected  external  financing  needs  for  the  period  covered  by  that  Ukrainian 

Financing Strategy, including a breakdown of the amounts in that budget necessary 

for the purposes of Article 2(2)(a) and (b) of this Regulation. That breakdown shall 

contain  the  value  of  defence  products  to  be  purchased  outside  the  Union  and 

Ukraine; 

g. 

committed  and  expected  external  financing  at  the  time  of  submission  of  the 

Ukrainian  Financing  Strategy  for  the  period  covered  by  that  Ukrainian  Financing 

Strategy, including a breakdown of the amounts of that external financing to be used 

in line with the purposes of Article 2(2)(a) and (b) of this Regulation; 

h.  on the basis of the information in points (f) and (g) of this paragraph, the expected 

external  financing  gap  for  which  Ukraine  seeks  assistance  under  the  Reparations 

Loan  under  that  Ukrainian  Financing  Strategy,  including  a  breakdown  of  the 

amounts of that expected external financing gap for the purposes of Article 2(2)(a) 

and (b) of this Regulation; 

i. 

in  order  to  support  multiannual  expenditure  under  Chapter  IV  of  this  Regulation, 

information on potential multiannual needs and a corresponding budget. 

3.  Ukraine  may  submit  updated  Ukrainian  Financing  Strategies  until  such  time  as  all 

undesignated budget  assistance  and  assistance provided in  accordance with  Chapter  IV 

has been made accessible under the Reparations Loan in accordance with Article 8. 

4. 

In derogation from paragraph 1, Ukraine may also receive financial assistance from the 

Reparations Loan as provided for in Article 10(3). 

Commission’s assessment of the Ukrainian Financing Strategy 

Article 7 

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1.  The Commission shall assess the Ukrainian Financing Strategy submitted in accordance 

with Article 6 without undue delay.  

2.  When carrying out the assessment referred to in paragraph 1, the Commission shall act in 

close  cooperation  with  Ukraine.  The  Commission  may  make  observations  or  seek 

additional  information,  including  verifying  information  with  Member  States,  third 

countries and international organisations. Ukraine shall provide any requested additional 

information and may revise the Ukrainian Financing Strategy if needed, including after 

its submission. 

3.  The  Commission  shall  assess  the  Ukrainian  Financing  Strategy  and  shall,  in  particular 

assess: 

a. 

the  completeness,  feasibility  and  coherence  of  the  Ukrainian  Financing  Strategy 

with the underlying assumptions; 

b. 

the consistency of the information in the Ukrainian Financing Strategy with external 

sources,  including  any  recent  reviews  of  the  International  Monetary  Fund  and 

information  from  the  Ukraine  Donor  Platform  and  the  Ukraine  Defence  Contact 

Group; 

c. 

the consistency of the expected external financing gap with the following indicative 

distribution of the Reparations Loan: 

i.  EUR  95  000  000  000  for  macro-financial  assistance  in  accordance  with 

Chapter III, out of which EUR 45 000 000 000 of designated budget assistance 

for the repayment of ERA Loans, or for assistance in the form of a loan to be 

implemented under the Ukraine Facility pursuant to Chapter III of Regulation 

(EU) 2024/792; 

ii.  EUR  115  000  000  000  to  support  Ukraine’s  defence  industrial  capacities  in 

accordance with Chapter IV. 

d. 

compliance with the precondition set out in Article 5(1). 

When carrying out the assessment, the Commission shall take into account any potential 
impact  on  the  Union’s  regular  capital  market  presence  that  the  financing  referred  to  in 
Article  23  to  finance  the  envisaged  amount  to  be  supported  by  the  Reparations  Loan 
would have. 

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4.  Where the Commission gives a positive assessment of the Ukrainian Financing Strategy, 

it  shall,  without  delay,  submit  a  proposal  for  a  Council  implementing  decision  in 

accordance with Article 8. 

5.  Where the Commission gives a negative assessment of the Ukrainian Financing Strategy, 

it  shall,  without  delay,  inform  Ukraine,  giving  reasons  for  its  assessment.  A  negative 

assessment  shall  not  prevent  Ukraine  from  submitting  a  revised  Ukrainian  Financing 

Strategy. 

6.  Where  the  Commission  assesses  an  update  to  the  Ukrainian  Financing  Strategy,  the 

provisions of this Article shall apply. 

Article 8 

Council implementing decision 

1.  Where the Commission makes a positive assessment of the Ukrainian Financing Strategy 

or its update, the Commission shall submit a proposal to the Council for an implementing 

decision making the financial and economic assistance accessible. 

2.  The Council implementing decision referred to in paragraph 1 shall: 

a. 

determine the amount of assistance to be made accessible to Ukraine to assist in the 

implementation  of  the  Ukrainian  Financing  Strategy,  including  the  amount  of  that 

assistance accessible: 

i. 

for  macro-financial  assistance  in  accordance  with  Chapter  III,  including  the 

amount to be accessible exclusively to maintain the ERA Loans initiative;  

ii. 

for assistance in the form of a loan to be implemented pursuant to Chapter III 

of Regulation (EU) 2024/792;  

iii. 

to support Ukraine’s defence industrial  capacities in accordance with Chapter 

IV. 

b. 

establishing  the  maximum  number  and  indicative  value  of  instalments  for  the 

assistance accessible for macro-financial assistance in accordance with Chapter III. 

3.  The determination of the amounts of the Reparations Loan to be made accessible shall: 

a. 

respect the maximum amount available for the Reparations Loan provided in Article 

4(1), whilst ensuring sufficient resources are available to respect Article 10(2); 

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b. 

take into account the need to ensure a fair burden sharing with other donors in the 

coverage of Ukraine’s financing needs. 

4.  The  Council  shall  adopt  the  implementing  decision  referred  to  in  paragraph  1  without 

undue delay. 

Article 9 

Complementarity and coordination 

1. 

In  the  implementation  of  the  Reparations  Loan,  the  Commission  shall  act  in  close 

cooperation  with  Ukraine,  Member  States,  relevant  international  bodies  and  donors  to 

Ukraine, notably through the Ukraine Donor Platform and the Ukraine Defence Contact 

Group,  to  ensure  a  coherent  and  consistent  approach  from  those  supporting  Ukraine  to 

address Ukraine’s financial and economic assistance needs. In doing so, the Commission 

shall draw on the expertise of the European External Action Service. 

2.  Article 5, Article 7, Article 13, Article 14, Article 15 and Article 22(1)(c) shall apply in 

accordance with Decision 2010/427/EU. 

CHAPTER III 

MACRO-FINANCIAL ASSISTANCE 

Article 10 

Purpose 

1.  The macro-financial  assistance shall contribute to  covering Ukraine’s financing  gap, as 

identified in a positively assessed Ukrainian Financing Strategy.  

2.  Until  such  time  as  the  ERA  Loans  are  repaid  in  full,  EUR  45  000  000  000  of  macro-

financial  assistance  shall  be  designated  as  available  exclusively  to  maintain  the  ERA 

Loans initiative. 

3.  Once  all  undesignated  budget  assistance  and  assistance  provided  in  accordance  with 

Chapter IV has been made accessible under approved Ukrainian Financing Strategies in 

accordance  with  Article  8,  the  Union  shall  make  available  to  Ukraine  the  remaining 

designated  budget  assistance  in  accordance  with  the  modalities  agreed  in  the 

memorandum of understanding referred to in Article 11(3). 

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4.  The  release  of  the  macro-financial  assistance  shall  be  managed  by  the  Commission  on 

the  basis  of  its  assessment  of  the  precondition  referred  to  in  Article  5  and  of  the 

satisfactory  fulfilment  of  the  policy  conditions  included  in  the  memorandum  of 

understanding referred to in Article 11. 

Article 11 

Memorandum of Understanding 

1. 

In respect of the approved amounts of macro-financial assistance as referred to in Article 

8(2)(a)(i),  the  Commission  shall  agree  with  Ukraine  on  policy  conditions  to  which  the 

macro-financial  assistance is to be linked. Those policy conditions shall be set out in  a 

memorandum of understanding (MoU).  

2.  The policy conditions shall include commitments, including those that aim, in particular, 

at  strengthening  revenue  mobilisation,  improve  the  sustainability  and  quality  of  public 

expenditure  and  enhance  the  efficiency,  transparency  and  accountability  of  the  public 

finance management systems. 

3.  The Commission shall agree with Ukraine in that MoU the modalities of how the macro-

financial assistance shall be used to maintain the ERA Loans initiative. 

4.  The  Commission  shall  approve  the  signature  of  the  MoU  and  of  its  amendments  by 

means  of  implementing  acts.  Those  implementing  acts  shall  be  adopted  in  accordance 

with the examination procedure referred to in Article 30(2). 

CHAPTER IV 

ASSISTANCE TO SUPPORT UKRAINE’S DEFENCE 
INDUSTRIAL CAPACITIES 

Article 12 

Purpose 

The  assistance  to  support  Ukraine’s  defence  industrial  capacities  shall  aim  at  enabling 
Ukraine to carry out urgent and major public investments in support of the Ukrainian defence 
industry and its integration into the European defence industry in response to and following 
the current crisis situation. This assistance shall contribute, in particular, to the reconstruction, 
recovery and modernisation of the Ukrainian Defence Technological and Industrial Base, with 
a  view  to  increasing  its  defence  industrial  readiness,  taking  into  account  its  gradual  future 
integration into the European Defence Technological and Industrial Base and through support 

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for  the  timely  availability  of  defence  products  and  other  products  for  defence  purposes, 
through cooperation between the Union and Ukraine.  

Article 13 

Eligibility 

1.  Activities, expenditures and measures to support Ukraine’s defence industrial capacities 

shall be eligible for assistance provided that they comply with the eligibility conditions 

set out in this Article.  

2.  The  activities,  expenditures  and  measures  to  support  Ukraine’s  defence  industrial 

capacities shall be related to defence products or other products for defence purposes and 

shall aim to: 

a. 

speed  up  the  adjustment  of  the  Ukrainian  defence  industry  to  structural  changes, 

including through the creation and ramp-up of its manufacturing capacities as well 

as related supporting activities; 

b. 

improve  the  timely  availability  of  defence  products  or  other  products  for  defence 

purposes  for  Ukraine,  including  through  the  reduction  of  their  delivery  lead  time, 

reservation  of  manufacturing  slots  or  stockpiling  of  defence  products  or  other 

products for defence purposes, intermediate products or raw materials; or 

c. 

enhance  cross-border  cooperation  between  the  European  Defence  Technological 

and Industrial Base and the Ukrainian Defence Technological  and Industrial Base, 

taking  into  account  the  defence  industrial  reinforcement  and  defence  procurement 

needs  of  Ukraine,  allowing  for  interchangeability  of  defence  products  or  other 

products for defence purposes manufactured by the Ukrainian defence industry and 

the European defence industry. 

3.  Defence products shall be produced in compliance with the following conditions: 

a.  Manufacturers  and  subcontractors  involved  in  the  production  shall  be  established 

and  have  their  executive  management  structures  in  the  Union,  in  an  EEA  EFTA 

State or in Ukraine. They shall not be subject to control by a third country which is 

not an EEA EFTA State or Ukraine or by another third-country entity which is not 

established in the Union, an EEA EFTA State or in Ukraine; 

b.  By  way  of  derogation  from  point  (a),  in  order  to  take  into  account  industrial 

cooperation  with  non-EU  partners,  defence  products  that  involve  a  subcontractor 

involved in the production which is allocated between 15 % and 35 % of the value 

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of  the  contract,  and  that  is  not  established  or  does  not  have  its  executive 

management structures in the Union, EEA EFTA State or Ukraine, shall be eligible 

providing that at least one of the following conditions are met: 

i. 

a  direct  contractual  relationship  related  to  the  defence  product  has  been 

established  between  the  contractor  and  that  subcontractor  prior  to  28  May 

2025; 

ii. 

the  manufacturer  commits  to  studying,  within  two  years,  the  feasibility  of 

replacing  the  input  provided  by  that  subcontractor  with  an  alternative, 

restriction-free  input  originating  in  the  Union,  EEA  EFTA  States  or  Ukraine, 

and meeting technical and time requirements. 

c.  By way of derogation from point (a), defence products involving manufacturers or 

subcontractors established in the Union and controlled by another third country or 

by another third-country entity which is not an EEA EFTA State or Ukraine shall be 

eligible  if  this  manufacturer  or  subcontractor  has  been  subject  to  screening  within 

the  meaning  of  Regulation  (EU)  2019/452  and,  where  necessary,  to  appropriate 

mitigation measures, or if this manufacturer provides guarantees in accordance with 

point (d) verified by the Member State in which it is established; 

d.  The  guarantees  referred  to  in  point  (c)  of  this  paragraph  shall  provide  assurances 

that the involvement of the manufacturer or subcontractor in the production of the 

defence product does not contravene the security and defence interests of the Union 

and its Member States as established in the framework of the common foreign and 

security  policy  pursuant  to  Title  V  of  the  Treaty  on  European  Union.  Those 

guarantees  shall  in  particular  substantiate  that,  for  the  purposes  of  activities, 

expenditures and measures, measures are in place to ensure that: 

i. 

control  over  the  manufacturer  or  subcontractor  is  not  exercised  in  a  manner 

that restrains or restricts its ability to carry out the activities, expenditures and 

measures supported; and 

ii. 

access  by a non-associated third country or by a non-associated third-country 

entity  to  classified  or  sensitive  information  relating  to  the  defence  product 

produced  is  prevented  and  the  employees  or  other  persons  involved  in  the 

production of the defence product have national security clearance issued by a 

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Member  State,  where  appropriate,  in  accordance  with  national  laws  and 

regulations. 

e.  The  infrastructure,  facilities,  assets  and  resources  of  the  manufacturers  and 

subcontractors  involved  in  the  production  shall  be  located  in  the  territory  of  a 

Member  State,  an  EEA  EFTA  State  or  Ukraine.  Where  manufacturers  or 

subcontractors involved in the production have no readily available alternatives or 

relevant infrastructure, facilities, assets and resources in the territory of a Member 

State, an EEA EFTA State or Ukraine, they may use their infrastructure, facilities, 

assets  and  resources  which  are  located  or  held  outside  those  territories,  provided 

that  such  use  does  not  contravene  the  security  and  defence  interests  of  the  Union 

and its Member States; 

f.  Manufacturers and subcontractors involved in the production may be considered to 

fulfil the eligibility conditions referred to in this paragraph where they have fulfilled 

equivalent conditions under Regulations (EU) 2018/109229, (EU) 2021/69730, (EU) 

2023/152531, or (EU) 2023/241832 of the European Parliament and of the Council or 

under  Regulation  (EU)  2025/1106  and  provided  that  no  subsequent  changes  call 

into question the fulfilment of those conditions; 

g.  The  cost  of  components  originating  outside  the  Union,  EEA  EFTA  States  and 

Ukraine shall not be higher than 35 % of the estimated cost of the components of 

the  defence  product.  No  component  shall  be  sourced  from  a  third  country  that 

contravenes the security and defence interests of the Union and its Member States; 

h.  For  the  purposes  of  this  paragraph,  ‘subcontractors  involved  in  the  production’ 

means any legal entity which provides critical inputs that possess unique attributes 

essential  for  the  functioning  of  a  product,  which  is  allocated  at  least  15  %  of  the 

29 

30 

31 

32 

Regulation (EU) 2018/1092 of the European Parliament and of the Council of 18 July 2018 establishing 
the  European  Defence  Industrial  Development  Programme  aiming  at  supporting  the  competitiveness 
and  innovation  capacity  of  the  Union’s  defence  industry  (OJ  L  200,  7.8.2018,  p.  30,  ELI: 
http://data.europa.eu/eli/reg/2018/1092/oj). 
Regulation (EU) 2021/697 of the European Parliament and of the Council of 29 April 2021 establishing 
the  European  Defence  Fund and repealing  Regulation  (EU)  2018/1092  (OJ  L  170,  12.5.2021,  p. 149, 
ELI: http://data.europa.eu/eli/reg/2021/697/oj). 
Regulation  (EU)  2023/1525  of  the  European  Parliament  and  of  the  Council  of  20  July  2023  on 
supporting 
7,  ELI: 
http://data.europa.eu/eli/reg/2023/1525/oj). 
Regulation  (EU)  2023/2418  of  the  European  Parliament  and  of  the  Council  of  18  October  2023  on 
establishing  an  instrument  for  the  reinforcement  of  the  European  defence  industry  through  common 
procurement (EDIRPA) (OJ L, 2023/2418, 26.10.2023, ELI: http://data.europa.eu/eli/reg/2023/2418/oj). 

ammunition 

production 

24.7.2023, 

(OJ  L 

(ASAP) 

185, 

p. 

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value  of  the  contract,  and  which  needs  access  to  classified  information  for  the 

performance of the contract. 

4.  By way of derogation from paragraph 3, a defence product which does not comply with 

at  least  one  of  the  conditions  set  out  in  that  paragraph  shall  be  eligible  where  the 

availability or the delivery lead time of a defence product which complies with paragraph 

3 is incompatible with the requirements of Ukraine, even if this product were subject to a 

priority rated request as referred to in Article 19, provided that the manufacturer of the 

defence product is established in the Union, in an EEA EFTA State or Ukraine. Where, 

in such a situation, the manufacturer involved in the production has no readily available 

alternatives or relevant infrastructure, facilities, and assets in the territory of a Member 

State, an EEA EFTA State or Ukraine, they may use their infrastructure, facilities, assets 

and resources which are located or held outside those territories, provided that such use 

does  not  contravene  the  security  and  defence  interests  of  the  Union  and  its  Member 

States.  This  derogation  is  not  applicable  in  the  case  where  the  manufacturer  does  not 

have  infrastructure,  facilities  or  assets  of  the  defence  industrial  and  technological  basis 

located on the territory of a Member State, an EEA EFTA State or Ukraine. 

5.  Manufacturers of other products for defence purposes shall be established in the Union, 

an EEA EFTA country or in Ukraine. 

6.  By way of derogation from paragraphs 3 and 5, contributions in accordance with point 

(e) of paragraph 8 of this Article shall be utilised in line with the eligibility conditions of 

the respective Union programme. 

7.  By  way  of  derogation  from  paragraphs  3  and  4,  subject  to  the  agreement  of  the 

Commission, where there is an urgent need for a given defence product stemming from 

Russia’s war of aggression against Ukraine and provided that such procurement does not 

contravene  the  security  and  defence  interests  of  the  Union  and  its  Member  States,  the 

procurement of a defence product which does not comply with the conditions set out in 

these paragraphs may be eligible for financial assistance under this chapter provided that:  

a. 

there is no equivalent product that responds to that urgent need which complies with 

the conditions set out in paragraph 3 and 4 or it is not available at the required scale; 

or 

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b. 

the delivery lead time for such a product is significantly shorter than for a product 

which would comply with the conditions set out in paragraph 3 and 4, even  if this 

product were subject to a priority rated request as referred to in Article 19. 

In such a case, Ukraine shall provide all evidence to be checked by the Commission that 

the conditions for the application of this derogation are met, including, in the context of 

point (b), a legal commitment by the manufacturer that it will comply with the delivery 

lead time. 

8.  Activities, expenditures  and measures related to  defence products  or other products  for 

defence  purposes  shall  be  implemented  within  one  of  the  following  methods  of 

implementation: 

a. 

procurements by Ukraine, subject to the procurement and delivery being validated 

by  the  Commission  or  involved  Member  States.  Ukraine  shall  be  responsible  for 

such  procurements  in  accordance  with  Ukrainian  law,  where  validations  by  the 

Commission  or  Member  States  shall  include  on  a  sample  basis  checks  on 

contractual  documentation,  invoices  and  delivery  certificates,  physical  inspections 

to suppliers and physical verification of deliveries; 

b.  procurements  by  Ukraine  that  are  a  common  procurement  in  accordance  with 

Regulation (EU) 2025/1106; 

c. 

agreements between Ukraine and Member States or the European Defence Agency;  

d.  procurement  agreements  between  Ukraine  and  international  or  intergovernmental 

organisations; 

e. 

contributions  by  Ukraine  to  the  Ukraine  Support  Instrument  established  by  [EDIP 

Regulation],  the  Ukraine  Investment  Framework  established  by  Regulation  (EU) 

2024/792 for dual-use goods or other Union programmes. 

Activities, expenditures and measures related to other products for defence purposes may 

also  be  implemented  by  procurements  by  Ukraine  for  procurements  below  EUR  7  000 

000,  provided  that  sound  financial  management  and  the  protection  of  the  financial 

interest of the Union are ensured. 

9.  Contracts relating to procurements, agreements or contributions referred to in paragraph 

8  shall  be  eligible  if  signed  after  [date  of  Commission  proposal]  provided  that  they 

comply with the requirements set out in this Article. 

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10.  The Commission shall be empowered to adopt a delegated act in accordance with Article 

29  to  supplement  this  Regulation  by  extending  eligibility  criteria  to  include  third 

countries other than EEA EFTA States and Ukraine that do not contravene the security 

and defence interests of the Union and its Member States, provided that such countries 

provide  sizeable  additional  support  to  Ukraine  that  can  be  used  for  expenditure  that 

contributes  to  the  aims  set  out  in  paragraph  2  and  is  open  to  participation  by  both 

European  and  Ukrainian  industry.  In  determining  whether  a  country  has  provided 

sizeable additional support to Ukraine, the Commission shall take into consideration the 

additional  support  as  a  percentage  of  Ukraine’s  financing  needs  in  comparison  to  the 

country’s GDP against the Union’s GDP. 

Article 14 

Product schedules 

1. 

In respect of the approved amounts of assistance to support Ukraine’s defence industrial 

capacities as referred to in Article 8(2)(a)(iii), Ukraine shall draw up a schedule for each 

activity, expenditure or measure related to a defence product or other product for defence 

purposes for which it intends to request assistance. That schedule shall set out: 

a. 

a description of the defence product or other product for defence purposes; 

b. 

information on compliance with Article 13. 

2.  Ukraine  shall  consult  the  schedule  with  the  Commission  with  a  view  of  ensuring 

compliance with Article 13. Should Ukraine not identify a method of implementation in 

accordance  with  Article  13(8)  or  should  the  Commission  consider  that  an  alternative 

method  of  implementation  is  more  economical,  efficient  or  effective,  the  Commission 

may  propose  a  method  of  implementation  to  Ukraine.  When  proposing  to  Ukraine  the 

most  appropriate  method  of 

implementation, 

the  Commission  shall 

take 

into 

consideration the timeliness of delivery of the relevant product, activity, expenditure or 

measure,  the  prices  available,  the  past  experience  with  that  method  of  implementation 

and,  where  warranted,  past  experience  with  manufacturers  under  that  method  of 

implementation. 

3.  By derogation from paragraph 1, Ukraine shall not be required to draw up a schedule for 

implementation in accordance with Article 13(8)(e). 

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Article 15 

Ukraine’s Defence Industrial Capacities Expert Group 

1.  To  support  the  implementation  of  assistance  to  support  Ukraine’s  defence  industrial 

capacities,  the  Commission  shall  establish  the  Ukraine’s  Defence  Industrial  Capacities 

Expert Group.  

2. 

In  addition  to  representatives  of  the  Commission  services  and  the  European  External 

Action Service, the Ukraine’s Defence Industrial Capacities Expert Group shall include 

representatives of Member States and EEA EFTA States. Third countries referred to in 

Article 13(9) shall be permitted to nominate representatives. Ukraine shall be invited to 

the meetings of the Ukraine’s Defence Industrial Capacities Expert Group as appropriate. 

3.  The  Ukraine’s  Defence  Industrial  Capacities  Expert  Group  shall  provide  advice, 

expertise and support on the defence products and other products for defence purposes, 

as well as on the method of implementation.  

Article 16 

Administration of the assistance to support Ukraine’s defence industrial capacities 

Ukraine shall open a special account for the sole purpose of the management of the financial 
and  economic  assistance  received  to  support  Ukraine’s  defence  industrial  capacities.  In 
relation to this account: 

a. 

all  payments  of  the  contracts  or  agreements  that  are  requested  for  assistance  to 

support Ukraine’s defence industrial capacities shall be paid from this account; 

b. 

the Commission shall be granted monitoring rights of this account; 

c.  Ukraine  shall  provide  the  Commission  with  a  monthly  report,  to  be  submitted 

within  10  working  days  of  the  end  of  each  month,  containing  the  following 

information: 

i. 

the  date  and  amount  of  each  payment  made  from  the  account  during  the 

preceding month;  

ii. 

the name of the recipient of each payment;  

iii.  a description of the purpose of each payment and how it relates to the contracts 

or agreements submitted in requests for funds;  

iv.  any other information as may be reasonably requested by the Commission. 

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Article 17 

Monitoring of implementation 

1.  The  Commission  shall  monitor  the  implementation  of  assistance  to  support  Ukraine’s 

defence  industrial  capacities,  notably  including  the  delivery  of  products,  in  accordance 

with this Article.  

2.  For  procurements  by  Ukraine  in  accordance  with  Article  13(8)(a)  that  are  validated  by 

the Commission, the Commission shall utilise the validation process therein.  

3.  For  procurements  by  Ukraine  in  accordance  with  Article  13(8)(a)  that  are  validated  by 

Member States, the Member State shall monitor the implementation of the procurement 

and the delivery in accordance with that provision and report to the Commission. 

4.  For  procurements  by  Ukraine  in  accordance  with  Article  13(8)(b),  the  Member  States 

that  are  part  of  such  a  common  procurement  shall  monitor  the  implementation  of  the 

procurement and the delivery and report to the Commission. 

5.  For  agreements  between  Ukraine  and  Member  States  in  accordance  with  Article 

13(8)(c), the Member State shall monitor the implementation  of the agreement and the 

delivery and report to the Commission. 

6.  For agreements between Ukraine and the European Defence Agency in accordance with 

Article 13(8)(c), the European Defence Agency shall monitor the implementation of the 

agreement and the delivery and report to the Commission. 

7.  For  procurement  agreements  between  Ukraine  and  international  or  intergovernmental 

organisations  in  accordance  with  Article  13(8)(d),  Ukraine  shall  include  in  such 

procurement agreements obligations on the respective international or intergovernmental 

organisations to monitor the implementation of the procurement and the delivery and to 

report to the Commission. 

8.  Should the Commission be notified by Ukraine of the non-implementation of a contract 

in  accordance  with  Article  20(2)(g)  or  become  aware  of  the  non-delivery  of  products 

under  this  Article  or  the  non-use  of  funds  in  the  account  referred  to  in  Article  16,  the 

Commission shall engage with Ukraine to repurpose those funds in accordance with the 

provisions of this Regulation. 

Article 18 

Modification of framework agreements or contracts 

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1.  Where activities, expenditures and measures related to defence products are implemented 

through the methods referred to in paragraph 8(b) or (c) of Article 13 within the Union, 

the  rules  provided  for  in  paragraphs  2  to  4  shall  apply  to  an  existing  framework 

agreement  or  contract  that  has  as  its  object  the  purchase  of  defence  products,  which  is 

used  in  that  implementation  method,  and  which  does  not  provide  for  the  possibility  to 

substantially amend it. When applying paragraphs 2 and 3, the contracting authority that 

concluded the framework agreement or contract  shall obtain the prior agreement of the 

undertaking with which it has concluded that framework agreement or contract. 

2.  A contracting authority of a Member State may modify an existing framework agreement 

or contract for defence products, where that framework agreement or contract has been 

concluded with an undertaking complying with criteria equivalent to those laid down in 

Article 13(3)  and  (4)  of  this  Regulation,  in  order  to  add  Ukraine  as  a  party  to  that 

framework agreement or contract.  

3.  By way of derogation from Article 29(2), third subparagraph, of Directive 2009/81/EC, a 

contracting  authority  of  a  Member  State  may  make  substantial  amendments  to  the 

quantities set out in a framework agreement or contract, with an estimated value above 

the  thresholds  laid  down  in  Article  8  of  Directive  2009/81/EC,  where  that  framework 

agreement or contract has been concluded with an undertaking that complies with criteria 

equivalent to those laid down in Article 13(3) and (4) of this Regulation, and insofar as 

the modification is strictly necessary for the application of paragraph 2 of this Article. 

4.  For  the  purpose  of  calculating  the  value  referred  to  in  paragraph  3,  the  updated  value 

shall be the reference point when the contract includes an indexation clause. 

5.  A  contracting  authority  which  has  modified  a  framework  agreement  or  contract  in  the 

cases referred to in paragraph 2 or 3 of this Article shall publish a notice to that effect in 

the  Official  Journal  of  the  European  Union  in  accordance  with  Article  32  of  Directive 

2009/81/EC. 

6. 

In  the  cases  referred  to  in  paragraphs  2  and  3,  the  principle  of  equal  rights  and 

obligations  shall  apply  between  the  contracting  authorities  which  are  party  to  the 

framework agreement or contract, in particular regarding the cost of additional quantities 

procured. 

Article 19 

Voluntary prioritisation of defence products 

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1.  For  the  sole  purpose  of  this  Regulation  and  where  Ukraine  is  confronted  with  severe 

difficulties  in  the  placing  or  in  the  execution  of  a  contract  for  the  supply  of  defence 

products that are urgently needed and meet the eligibility requirements set out in Article 

13(3)  or  (4),  an  economic  operator  together  with  the  Member  State  on  the  territory  of 

which its production site is  located may jointly submit  a request  to  the Commission  to 

issue a prioritisation measure to prioritise a certain order of such products manufactured 

by that economic operator.  

2.  The joint request referred to in paragraph 1 shall include the following elements: 

(a)  The initial request from Ukraine; 

(b)  The  list  of  products  to  be  subject  to  the  prioritisation  measure,  their 

specifications and the quantities in which they are to be supplied; 

(c)  The time limits within which the delivery of these products is to be completed; 

(d)  Evidence  that  the  economic  operator  cannot  meet  the  request  from  Ukraine 

referred to in point (a) without a prioritisation measure; 

(e)  An indication of a fair and reasonable price at which the prioritisation measure 

could be placed as well as elements substantiating that price. 

3.  Upon reception of a request as referred to in paragraph 1, the Commission shall assess 

that request without undue delay.  

4.  The  Commission  shall  base  its  assessment  referred  to  in  paragraph  3  on  objective, 

factual,  measurable  and  substantiated  data,  with  the  aim  of  determining  whether  such 

prioritisation  is  indispensable  in  order  to  address  the  severe  difficulties  referred  to  in 

paragraph 1. 

5.  Where  the  assessment  referred  to  in  paragraph  3  concludes  that  the  prioritisation  is 

indispensable,  the  Commission,  by  means  of  an  implementing  act,  shall  adopt  a 

prioritisation measure setting out: 

a. 

the  legal  basis  of  the  priority-rated  request  to  be  complied  with  by  the  economic 

operator; 

b. 

the list of products subject to the priority-rated request, their specifications and the 

quantities in which they are to be supplied; 

c. 

the time limits within which the priority-rated request is to be completed; 

d. 

the beneficiaries of the priority-rated request; 

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e. 

the scope of contractual obligations over which the priority-rated request shall have 

precedence; 

f. 

the waiver of contractual liability under the conditions laid down in paragraph 7 of 

this Article; and 

g. 

the penalties provided for in paragraphs 12 to 18 of this Article for non-compliance 

with the obligations stemming from that implementing act. 

The implementing act referred to in the first subparagraph of this paragraph shall be 

adopted in accordance with the examination procedure referred to in Article 30(2). 

6.  The prioritisation measure referred to in paragraph 5 shall:  

a. 

be  placed  at  a  fair  and  reasonable  price,  adequately  taking  into  account  the 

economic operator’s opportunity costs when fulfilling the prioritisation measure as 

compared to existing contractual obligations; and  

b. 

take precedence over any contractual obligations under private or public law related 

to  the  defence  products  subject  to  the  prioritisation  measure,  under  the  conditions 

laid down in the implementing act referred to in paragraph 5. 

7.  The economic operator subject to a prioritisation measure pursuant to paragraph 5 shall 

not  be  liable  for  any  breach  of  contractual  obligation  that  is  governed  by  the  law  of  a 

Member State, provided that: 

a. 

the  breach  of  contractual  obligation  is  strictly  necessary  for  compliance  with  the 

required prioritisation; 

b. 

the implementing act referred to in paragraph 5 has been complied with; and 

c. 

the  request  referred  to  in  paragraph  1  did  not  have  the  sole  purpose  of  unduly 

avoiding a prior performance obligation under private or public law. 

8.  The economic operator subject to a prioritisation measure may request the Commission 

to modify the implementing act referred to in paragraph 5 where it considers it to be duly 

justified based on one of the following grounds: 

a. 

the economic operator is unable to perform the prioritisation measure on account of 

insufficient  production  capability  or  production  capacity,  even  under  preferential 

treatment of the request; 

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b. 

completion  of  the  prioritisation  measure  would  place  an  unreasonable  economic 

burden on, and entail particular hardship for, the economic operator. 

9.  The economic operator shall provide all relevant and substantiated information to allow 

the  Commission  to  assess  the  merits  of  the  request  for  modification  referred  to  in 

paragraph 8. 

10.  Based  on  the  examination  of  the  reasons  and  evidence  provided  by  the  economic 

operator,  the  Commission  may,  after  consultation  and  prior  agreement  of  the  Member 

State  on  the  territory  of  which  the  relevant  production  site  of  the  economic  operator 

concerned is  located, amend its implementing act to  release, partially or in  totality,  the 

economic operator concerned from its obligations under this Article. 

11.  Where  an  economic  operator,  after  having  expressly  accepted  to  prioritise  the  orders 

requested by the Commission, intentionally or through gross negligence does not comply 

with  the  obligation  to  prioritise  those  orders,  it  shall  be  subject  to  fines  set  out  in 

paragraphs 12 to 18 of this Article, except where: 

a. 

the economic operator is unable to perform the priority-rated request on account of 

insufficient  production  capability  or  production  capacity,  or  on  technical  grounds; 

or 

b.  performance  or  completion  of  the  request  would  place  an  unreasonable  economic 

burden  on,  and  entail  particular  hardship  for,  the  economic  operator,  including 

substantial risks relating to business continuity. 

The  revenue  from  the  fines  shall  constitute  external  assigned  revenue  within  the 

meaning of Article 21(5) of the Regulation (EU, Euratom) 2024/2509 to an external 

assistance programme under which Ukraine is eligible. 

12.  Where  it  deems  it  to  be  necessary  and  proportionate,  the  Commission  may,  by  way  of 

implementing acts, impose on the economic operators fines not exceeding EUR 300 000 

where the economic operator, intentionally or through gross negligence, does not comply 

with the obligation to perform the priority-rated request pursuant to this Article.  

The  implementing  acts  referred  to  in  the  first  subparagraph  of  this  paragraph  shall  be 

adopted in accordance with the examination procedure referred to in Article 30(2). 

13.  Before  taking  a  decision  pursuant  to  paragraph  12,  the  Commission  shall  provide  an 

opportunity  for  the  economic  operator  concerned  to  be  heard  in  accordance  with 

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paragraph  15.  The  Commission  shall  take  into  account  any  duly  reasoned  justification 

presented  by  the  economic  operator  for  the  purpose  of  determining  whether  fines  are 

deemed necessary and proportionate. 

14.  In fixing the amount of the fine, the Commission shall take into consideration the nature, 

gravity  and  duration  of  the  infringement,  including  whether  the  economic  operator  has 

partially complied with the priority-rated order or the priority-rated request. 

15.  Before adopting a decision pursuant to paragraph  12, the Commission shall ensure that 

the  economic  operators  concerned  have  been  given  the  opportunity  to  submit 

observations on: 

a. 

the  preliminary  findings  of  the  Commission,  including  any  matter  in  relation  to 

which the Commission has raised objections; 

b. 

the  measures  that  the  Commission  may  intend  to  take  in  view  of  the  preliminary 

findings pursuant to point (a) of this paragraph. 

16.  The economic operators concerned may submit to the Commission their observations on 

the  Commission’s  preliminary  findings  within  a  time  limit  which  shall be  fixed  by  the 

Commission  in  its  preliminary  findings,  and  which  may  not  be  less  than  14  working 

days. 

17.  The  Commission  shall  base  its  imposition  of  fines  only  on  objections  on  which  the 

economic operators concerned have been able to comment. 

18.  Where  the  Commission  has  informed  the  economic  operators  concerned  of  its 

preliminary findings as referred to in paragraph 15, it shall give access, if so requested, 

to  the  Commission's  file  under  the  terms  of  a  negotiated  disclosure,  subject  to  the 

legitimate interest of economic operators in the protection of their business secrets, or in 

order  to  preserve  business  secrets  or  other  confidential  information  of  any  person.  The 

right  of  access  to  the  file  shall  not  extend  to  confidential  information  and  internal 

documents  of  the  Commission  or  the  authorities of  the  Member  States,  in  particular  to 

correspondence  between  the  Commission  and  the  authorities  of  the  Member  States. 

Nothing  in  this  paragraph  shall  prevent  the  Commission  from  disclosing  and  using 

information necessary to prove an infringement. 

19.  This Article is without prejudice to the rights of the Member States to protect its essential 

security interests in accordance with Article 346(1)(b) TFEU. 

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CHAPTER V  

FINANCING AND IMPLEMENTATION 

Article 20 

Reparations Loan Agreement 

The  detailed  financial  terms  of  the  Reparations  Loan  shall  be  laid  down  in  the 

1. 
Reparations Loan Agreement.  

In addition to the elements laid down in Article 223(4) of Regulation (EU, Euratom) 

2. 
2024/2509, the Reparations Loan Agreement shall require that: 

(a) 
the  Reparations  Loan  shall  be  a  limited  recourse  loan  that  shall  become  due 
and payable upon the occurrence of a repayment trigger as defined in subparagraph 
(k); 

(b)  Ukraine shall provide the Union a security interest over its claim on Russia for 
reparations as security for the Reparations Loan. The value of  that security interest 
shall at any given time be equal to the value of disbursed funds under the Reparations 
Loan; 

(c) 
the  rights,  responsibilities  and  obligation  provided  for  in  the  framework 
agreement  under  the  Ukraine  Facility  referred  to  in  Article  9  of  Regulation  (EU) 
2024/792 apply to this Reparations Loan Agreement and the funds therein; 

(d) 
the amount of assistance referred to in Article 8(2)(a)(ii) shall be implemented 
in accordance with Chapter III of Regulation (EU) 2024/792, with  the exception of 
rules on the duration and repayment of the loan, which shall be governed by the rules 
of this Regulation; 

(e)  Ukraine utilises the same management and control systems as proposed in the 
Ukraine  Plan  established  under  Regulation  (EU)  2024/792,  including  beyond  the 
availability period referred to in Article 6(2) in that Regulation; 

(f) 
the  Commission  have  the  right  to  monitor  activities,  expenditures  and 
measures under Chapter IV of this Regulation that are carried out by the Ukrainian 
authorities, along the whole project cycle; 

(g)  Ukraine  immediately  notify  the  Commission  should  a  draft  contract  or 
agreement financed through the Reparations Loan not be implemented; 

(h)  Ukraine continues to respect the precondition set out in Article 5(1); 

(i)  Ukraine  does  not  reverse  any  measure  taken  under  any  other  current  or 
previous  instruments  of  support  provided  by  the  Union  or  IMF  concerning  anti-
corruption; 

(j) 
prior to  the disbursement  of financial and  economic assistance, Ukraine  shall 
conclude a contribution agreement with the Commission pursuant to Article 4(2) of 
Regulation (EU) 2024/2773 to ensure the ERA Loans initiative is maintained; 

(k)  Ukraine  shall  be  liable  for  the  repayment  of  the  principal  of  the  Reparations 
Loan  within  30  days,  if  any  of  the  following  conditions  are  fulfilled,  each 
constituting a repayment trigger for the purposes of this Regulation:  

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the receipt of cash by Ukraine for war reparations, indemnities or any 

i. 
financial settlement from Russia, up to the amount of such settlement; or 

ii. 
90  days  from  the  receipt  of  non-monetary  assets  by  Ukraine  for  war 
reparations,  indemnities  or  any  financial  settlement  from  Russia,  except 
territory, up to the amount of such settlement which shall be determined by an 
independent valuation. Upon request of Ukraine, the Commission may grant an 
extension of this timeframe if strictly warranted; or 

iii. 

that Ukraine is in breach of subparagraph (h); or 

iv. 
it  has  been  established  that,  in  relation  to  the  management  of  the 
Reparations Loan, Ukraine has engaged in any act of fraud, corruption or any 
other illegal activity detrimental to the financial interests of the Union. 

(l)  Ukraine is liable to repay the Reparations Loan: 

i. 
in the event of subparagraph (k), points (i) and (ii), for an amount of the 
monetary value of the war reparations, indemnities or any financial settlement 
from  Russia  equal  to  the  proportion  of  the  Reparations  Loan  outstanding 
against  the  sum  of  the  value  of  the  Reparations  Loan  outstanding,  any 
outstanding  reparations  loans  provided  by  G7  members  and  any  outstanding 
liabilities under ERA loans; 

in  the  event  of  subparagraph  (k),  point  (iii),  for  the  total  outstanding 

ii. 
amount of the Reparations Loan; 

in  the  event  of  subparagraph  (k),  point  (iv),  for  the  value  of  fraud, 
iii. 
corruption or any other illegal activity detrimental to the financial interests of 
the Union. 

(m)  any amounts of the Reparations Loan not covered by the liability referred to in 
subparagraph (l) shall remain in place until future repayment trigger events occur; 

(n) 
in case of payments or recoveries, Ukraine shall indicate the relevant payments 
from  the  Reparations  Loan  that  are  being  repaid  or  recovered  in  accordance  with 
Article 25(6). 

The Reparations Loan Agreement shall also include any other requirements needed 
for the implementation of the Reparations Loan. 

3. 
Non-compliance with the terms of the Reparations Loan Agreement shall constitute a 
ground  for  the  Commission  to  suspend  or  cancel,  in  full  or  in  part,  the  release  of  the 
instalment or tranches.  

The  Reparations  Loan  Agreement  shall  be  made  available,  upon  request, 

4. 
simultaneously to the European Parliament and to the Council. 

Article 21 

Request for funds 

1. 
To receive financial and economic assistance, Ukraine shall submit to the Commission 
a duly justified request for funds. Such a request for funds may be submitted by Ukraine to 
the Commission, in principle, six times a year. 

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For macro-financial assistance, the request for funds shall be accompanied by a report 

2. 
in accordance with the provisions of the MoU. 

3. 

For assistance to support Ukraine’s defence industrial capacities: 

the request for funds may cover multiple products. For each covered product, 
(a) 
the request for funds shall contain a contract or agreement in compliance with Article 
13 and a schedule in accordance with Article 14. Such contracts or agreements may 
be signed or in a finalised draft form; 

(b) 
if the request for funds requests funding for an amount greater than 20% of the 
amount  made  accessible  in  accordance  with  the  Council  implementing  decision 
referred  to  in  Article  8,  Ukraine  shall  provide  a  detailed  justification,  including  on 
the impact for future requests for funds under that decision. 

Article 22 

Decision on the release of assistance  

The Commission shall decide on the release of assistance subject to its assessment of 

1. 
the following requirements: 

(a) 

for macro-financial assistance that is not designated budget assistance: 

i. 

compliance with the precondition set out in Article 5(1);  

the satisfactory fulfilment of the policy conditions set out in the MoU 

ii. 
referred to in Article 11; and 

compliance with the Reparations Loan Agreement referred to in Article 

iii. 
20. 

for  designated  budget  assistance,  that  the  request  is  in  accordance  with  the 

(b) 
modalities of the MoU as referred to in Article 11(3). 

(c) 

for assistance to support Ukraine’s defence industrial capacities: 

i. 

compliance with the precondition set out in Article 5(1); 

confirmation  that  the  contracts  or  agreements  are  for  products  in 
ii. 
compliance  with  Article  13  and  that  the  Commission  does  not  object  to  the 
methods of implementation;  

confirmation 

iii. 
the  qualitative  and 
that  Ukraine  broadly  respects 
quantitative  steps  contained  in  the  Annex  to  Implementing  Decision  (EU) 
2024/1447 and any amendments thereto;  

compliance  with  the  obligations  referred  to  in  Article  16  and  the 

iv. 
Reparations Loan Agreement referred to in Article 20; and 

v. 
to  the  extent  necessary,  the  adequacy  of  the  detailed  justification  of 
Ukraine,  taking  into  account  the  situation  in  Ukraine  and  the  committed  and 
expected external financing available. 

2. 
Subject  to  compliance  with  the  amount  of  assistance  accessible  provided  for  in  the 
Council implementing decision adopted in accordance with Article 8, where the Commission 
makes  a  positive  assessment  of  the  request  for  funds,  it  shall  adopt,  without  undue  delay,  a 
decision  authorising  the  disbursement  of  the  Reparations  Loan.  For  assistance  to  support 

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Ukraine’s defence industrial capacities, that amount to be disbursed shall be equal to the value 
of the contracts or agreements included in the request for funds. 

The Commission may proceed with the decision referred to in paragraph 2 for points 

3. 
(a), (b) and (c) under paragraph 1 collectively or individually. 

4. 
Where the Commission gives a negative assessment to the request for funds, it shall, 
without  undue  delay,  inform  Ukraine,  giving  reasons  for  its  assessment.  A  negative 
assessment shall not prevent Ukraine from submitting a new request for funds. 

Article 23 

Financing of the Reparations Loan 

1. 
In order to  finance the assistance under the Reparations Loan, the Commission  shall 
be empowered, on behalf of the Union, to borrow the necessary cash  balances referred to in 
Article 4(1)(a). The diversified funding strategy referred to in Article 224 of Regulation (EU, 
Euratom) 2024/2509 shall not apply to that financing. 

For the purposes of paragraph 1 of this Article, upon receipt of the Commission’s call 
2. 
for funds, financial institutions shall provide the Commission with the necessary amount from 
the cash balances referred to in Article 4(1)(a). The following financial parameters shall apply 
to the debt obligation of the Union towards relevant financial institutions established upon the 
amount being received by the Commission (‘debt instrument’):   

(a) 
the interest due by the Union shall be equal to the interest owed to the Central 
Bank of Russia under the terms of the relevant contracts or other arrangements by the 
relevant financial institution on the assets and reserves referred to in Article 4(1)(a);  

(b) 

the maturity of the debt instrument shall be: 

i. 

for central securities depositories, one-day; 

ii. 
for  financial  institutions  that  are  not  central  securities  depositories, 
adapted to the nature of the relevant contracts or other arrangements referred to 
in subparagraph (a);  

(c) 

the debt instrument shall be in the currency of the associated cash balance; 

the repayment of the debt instrument shall be made in the form of cash, or, if 

(d) 
strictly necessary, cash equivalents for the use as collateral; 

(e) 
the amount due by the Union under the debt instrument shall be reduced by an 
amount equal to the share of the outstanding balance of that debt instrument of the 
total outstanding balance of such debt instruments, against the amount reimbursed by 
the Union to Member States pursuant to Article 24(2). That reduction shall be carried 
out following a notification by the Union and occur at the occasion of the maturity of 
the debt instrument. 

That debt instrument shall be treated as equivalent to cash under applicable accounting rules. 

3. 
On  the  basis  of  applicable  Union  law,  the  Commission  shall  notify  each  financial 
institution from which it intends to call funds from. In deciding which financial institutions to 
notify, the Commission shall take into consideration the conditions of funding, including the 

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cost of funding, the availability of funds in euro and administrative demands, whilst ensuring 
the due involvement of all such financial institutions over time. 

The  Commission  and  the  financial  institutions  may  agree  on  arrangements  specifying  in 
particular the modalities of the call for funds, cost coverage and compensations related to the 
provision of funds and repayment modalities. 

Any  implementation  of  a  debt  instrument  bearing  costs  for  the  Union  is  conditional  upon 
contingent cost coverage:  

(a) by the Member States via contributions in line with Article 21(2)(a) of Regulation 
(EU, Euratom) 2024/2509; 

(b) by the Member States in accordance with the conditions set out in Article 26 or 
third countries in accordance with Article 27; or 

(c)  by  the  Union  budget  provided  that  the  conditions  set  out  in  Article  4(5)  are 
cumulatively  fulfilled  in  a  manner  that  allows  coverage  of  those  costs  of  the  debt 
instrument. 

4. 
For the purposes of paragraph 1 of this Article, the Commission shall be empowered 
on  behalf  of  the  Union  to  call  the  funding  from  financial  institutions  that  it  has  notified  in 
accordance with paragraph 3 for an amount equal to the instalment or tranche to be released. 
The  call  for  funds  shall  include  instructions  on  the  payment  of  cash  balances  referred  to  in 
Article 4(1)(a) and repayment of the debt instrument. 

5. 
By derogation from paragraph 4, if the application of point (e) of paragraph 2 leads to 
a reduction exceeding the outstanding balance of the debt instrument, the Commission shall 
be empowered on behalf of the Union to call the funding from financial institutions that it has 
notified in accordance with paragraph 3 for an amount equal to that excess. 

The  debt  instrument  referred  to  in  paragraph  2  of  this  Article  shall  fully  protect  the 
6. 
financial  position  of  the  relevant  financial  institution  and  enable  them  to  honour  all 
contractual commitments related to the assets and reserves of the Central Bank of Russia.  

By  derogation  from  Articles  112(2)  and  114(2)  of  the  Regulation  (EU,  Euratom) 
7. 
2024/2509,  the  legal  commitment  pursuant  to  Article  24  may  be  adopted  without  the  prior 
making  of  a  budgetary  commitment,  which  may  be  broken  down  over  several  years  into 
annual instalments. 

8. 
A  Union  liquidity  mechanism  is  established  for  the  sole  purpose  of  ensuring  the 
repayment referred to in point (d) of paragraph 2. To finance the Union liquidity mechanism, 
the Commission shall be empowered, on behalf of the Union, to borrow the necessary funds 
on  the  capital  markets  or  from  financial  institutions  in  accordance  with  Article  224  of 
Regulation  (EU,  Euratom)  2024/2509.  The  borrowing  and  lending  operations  related  to  the 
Union liquidity mechanism shall be carried out in euros.  

The  borrowing  for  the  Union  liquidity  mechanism  and  its  costs  shall  be  covered  in 

9. 
accordance with the guarantees provided: 

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by  the  Member  States  in  accordance  with  the  conditions  set  out  in  Article 

(a) 
26(e); or 

under  the  Union  budget,  if  the  Union  liquidity  facility  is  financed  after  the 

(b) 
conditions set out in Article 4(5) are cumulatively fulfilled. 

10. 

As of the moment the conditions set out in Article 4(5) are cumulatively fulfilled: 

(a)  without  prejudice 
to  Article  223(4)(e)  of  Regulation  (EU,  Euratom) 
2024/2509, any exchange rate costs related to the Reparations Loan shall initially be 
borne by the Union budget; 

(b) 
by  a  way  of  derogation  from  Article  214(4),  point  (c)  of  Regulation  (EU, 
Euratom) 2024/2509, where following repayment of the borrowing referred to in this 
Article by the guarantee under the Union budget referred to in Article 4(5), amounts 
paid by or recovered from Ukraine in respect of the assistance under the Reparations 
Loan  referred  to  in  Article  4(1)  or  amounts  recovered  on  the  basis  of  the  right 
referred to in Article 24(2) shall be entered in the Union budget as other revenue. 

11. 
By  way  of  derogation  from  Article 31(3),  second  sentence,  of  Regulation  (EU) 
2021/947, the financial assistance provided to Ukraine under the Reparations Loan shall not 
be  supported  by  the  External  Action  Guarantee.  No  provisioning  for  the  Reparations  Loan 
shall  be  constituted  and,  by  way  of  derogation  from  Article 214(1)  of  Regulation  (EU, 
Euratom) 2024/2509, no provisioning rate shall be set. 

Article 24 

Fair sharing and solidarity 

1.  The  Union  and  Member  States  shall  undertake  any  action  necessary  to  minimise 

financial  and  legal  risks  linked  to  the  application  of  this  Regulation.  To  achieve  this 

objective, and without prejudice to Article 11, 11a, 11e and 11f of Regulation 833/2014 

and of Article 5 of Regulation (EU) [Article 122 Regulation], Member States shall take 

any necessary measure in accordance with the Treaties. 

2.  With a view to ensure fair sharing and solidarity, the Union shall reimburse, within the 

limit of the amount which may be made available pursuant to Article 4(1), the amounts 

referred to in Article 5a(7), fifth subparagraph of Regulation 833/2014 and Article 4(4) 

of Regulation (EU) [Article 122 proposal] upon duly justified request of Member States 

if the relevant proceedings were launched by [16.5 years from the date of entry into force 

of  this  Regulation].  The  Union  shall  assume  any  right  in  respect  of  the  reimbursed 

amounts. 

3.  The reimbursement referred to in paragraph 2, shall draw, if necessary, on contributions 

by  Member  States  in  the  form  of  the  irrevocable,  unconditional  and  on-demand 

guarantees as provided in Article 25. 

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4.  The Commission shall explore all available options to safeguard Member States should 

that prove necessary for further strengthening of fair sharing and solidarity. 

Contribution in the form of guarantees by Member States 

Article 25 

1. 
Member  States  may  contribute  by  providing  guarantees  of  up  to  the  total  amount  of 
EUR 210 000 000 000 in respect of the assistance under the Reparations Loan in accordance 
with Article 4(1) and the fair sharing and solidarity pursuant to Article 24(2). 

Where contributions from the Member States are made, they shall be provided in the 
2. 
form of irrevocable, unconditional and on-demand guarantees through a guarantee agreement 
with the Commission, in accordance with Article 26. 

The  relative  share  of  the  contribution  of  the  Member  State  concerned  (contribution 
3. 
key) to the amount referred to in paragraph 1 of this Article shall correspond to the relative 
share of that Member State in the total GNI of the Union, as resulting from heading ‘General 
Revenue’  of  the  budget  for  2026,  Part  A  (‘Financing  of  the  Union’s  annual  budget, 
Introduction’), Table 4, column (1), set out in the general budget of the Union for the financial 
year 2026, as definitively adopted on [date of adoption of the general budget of the Union for 
the financial year 2026]. 

The  guarantee  shall  become  effective  in  respect  of  the  Member  States  in  two  equal 

4. 
tranches. The following shall apply: 

(a) 
the  first  tranche  of  the  guarantees  shall  become  effective  in  respect  of  the 
Member State as of the date of entry into force of the guarantee agreement between 
the Commission and the Member State concerned, referred to in Article 26; 

the  second  tranche  of  the  guarantee  shall  become  automatically  effective  in 
(b) 
respect of the Member State on 1 January 2028 unless the Member State has notified 
the Commission by 31 December 2027 that the second tranche of the guarantee shall 
not become effective upon it as of 1 January 2028. Where the second tranche of the 
guarantee  has  not  become  automatically  effective  pursuant  to  the  first  sentence,  it 
shall become effective in respect of the Member State concerned as of the date which 
that Member State notifies the Commission. 

Cost coverage pursuant to point (c) of Article 26 shall reduce the amount of the available loan 
pursuant to Article 4(1) by an amount to be determined by the Commission.  

Amounts resulting from calls on the guarantees other than those financed through the 
5. 
Union liquidity mechanism referred in Article 23(8) shall constitute external assigned revenue 
in  accordance with  Article 21(2), point (a), of Regulation  (EU, Euratom) 2024/2509  for the 
repayment  of  financial  liabilities  of  the  Union  towards  financial  institutions  stemming  from 
the assistance under the Reparations Loan referred to in Article 4(1). 

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6. 
By  way  of  derogation  from  Article  214(4),  point  (c),  of  Regulation  (EU,  Euratom) 
2024/2509,  following  the  honouring  of  a  guarantee  call  in  accordance  with  Article  26(a), 
amounts paid by or recovered from Ukraine in respect of the assistance under the Reparations 
Loan referred to in Article 4(1) or amounts recovered on the basis of the right referred to in 
Article 24(2) shall be reimbursed to those Member States up to the amount of the guarantee 
calls honoured by Member States pursuant  to Article 26(a).  In such payments or recoveries 
from  Ukraine,  Ukraine  shall  indicate  the  relevant  payments  from  the  Reparations  Loan  that 
are  being  repaid  or  recovered,  where  it  shall  be  ensured  that  a  proportional  repayment  or 
recovery  of  funds  takes  place  against  the  amounts  outstanding  for  payments  made  under 
Chapters III and Chapter IV of this Regulation. On that basis, the reimbursements to Member 
States shall be provided in full respect of the security and defence policy of certain Member 
States and taking into account the security and defence interests of all Member States. 

Article 26 

Guarantee agreements 

The Commission shall conclude a guarantee agreement with each Member State that provides 
a  guarantee  referred  to  in  Article  25.  That  agreement  shall  set  out  the  rules  governing  the 
guarantee, which shall be the same for all Member States, including, in particular, provisions: 

(a) 
establishing  the  obligation  of  the  Member  States  to  honour  guarantee  calls 
made by the Commission in respect of the financing referred to in Article 23 and in 
respect of the fair sharing and solidarity pursuant to Article 24(2); 

(b) 

ensuring that the guarantee calls are made: 

i. 
in  respect  of the financing referred to  in  Article 23, pro rata based on 
the  amount  of  the  guarantee  compared  to  the  cumulative  ceiling  of  the 
guarantees  that  are  effective,  including  third  country  guarantees  provided  in 
accordance with Article 27(2); 

ii. 
in  respect  of  the  application  of  Article  24(2),  pro  rata  based  on  the 
amount of the guarantee compared to the cumulative ceiling of the guarantees 
from Member States that are effective. 

(c) 

providing that the guarantee calls ensure the Union’s ability to: 

repay  the  cash  balances  borrowed  pursuant  to  Article  23  should  such 
i. 
amount  fall  due  in  accordance  with  Article  23(2)(d)  while  Ukraine  has  not 
repaid the Reparations Loan, including if as Ukraine has no obligation to repay 
in  accordance  with  Article  20(2)(a),  as  well  as,  where  applicable,  costs, 
including costs as referred to in point (b) of the third subparagraph of Article 
23(3) and costs of exchanges to and from foreign currencies; 

ii. 

honour any claims in accordance with Article 24. 

(d) 
regarding the payment conditions, including that a Member State may honour a 
guarantee call by providing cash or utilising the Union liquidity mechanism referred 
to in Article 23(8); 

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(e) 
establishing the provisions related to the Union liquidity mechanism referred to 
in  Article  23(8)  in  line  with  Article  223  of  Regulation  (EU,  Euratom)  2024/2509. 
Those  provisions  shall  include  the  provision  that  the  use  of  the  Union  liquidity 
mechanism  shall  be  deemed  requested  by  the  Member  State  to  the  extent  that  the 
Member  State  does  not  indicate  to  the  Commission,  within  a  deadline  set  by  the 
latter,  the  intention  to  use  its  own  cash  resources  to  honour  the  guarantee  call;  the 
maximum  amount  that  a  Member  State  may  use  under  the  Union  liquidity 
mechanism,  which  shall  be  equal  to  the  maximum  value  of  the  guarantee  of  that 
Member  State;  the  maximum  duration  of  each  disbursement  of  the  Union  liquidity 
mechanism, which shall be strictly linked to the purpose of ensuring the repayment 
of the debt instrument; and that all costs incurred by the Union that relate to financial 
assistance shall be borne by the beneficiary Member State;  

ensuring that the guarantees shall cease to be callable upon notification by the 

(f) 
Commission as of the earliest of:  

i. 
the date that the conditions referred to in Article 4(5) are met, without 
prejudice to  any outstanding  obligation of the Member State under paragraph 
(e) of this Article; or 

ii. 
the  date  where  both  (i)  transactions  related  to  the  management  of 
reserves  as  well  as  of  assets  of  the  Central  Bank  of  Russia,  including 
transactions with any legal person, entity or body acting on behalf of, or at the 
direction of, the Central Bank of Russia, such as the Russian National Wealth 
Fund, are permitted and (ii) there are no further possible claims under Article 
24(2). 

Article 27 

Contribution by third countries 

1.  Third countries  may contribute by providing guarantees or by supporting currency  risk 

management  related  to  any  conversion  of  the  cash  balances  borrowed  from  financial 

institutions in accordance with Article 23. 

2.  Where contributions from third countries are made in the form of guarantees, they shall 

be provided in the form of irrevocable, unconditional and on-demand guarantees through 

a guarantee agreement with the Commission. That agreement shall contain the provisions 

of Article 26(a), (b)(i), (c)(i) mutatis mutandis. Such guarantees shall be over and above 

the guarantees provided by Member States in accordance with Article 25. 

3.  Where  contributions  from  third  countries  are  made  in  the  form  of  supporting  currency 

risk  management  related  to  any  conversion  of  cash  balances  borrowed  from  financial 

institutions in accordance with Article 23, the Commission shall conclude an agreement 

with  each  third  country  providing  the  necessary  arrangements  for  such  a  contribution. 

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Those contributions shall constitute external assigned revenue in accordance with Article 

21(2), point (e), of Regulation (EU, Euratom) 2024/2509.  

4.  The Commission shall inform the European Parliament and the Council simultaneously 

and without delay of agreements concluded pursuant to this Article. 

Application of the rules on classified information and sensitive information 

Article 28 

1.  Classified  information  that  is  created,  handled,  stored,  exchanged  or  shared  under  this 

Regulation shall be protected in accordance with the security rules set out in Commission 

Decision (EU, Euratom) 2015/444 or the Agreement between the Member States of the 

European  Union,  meeting  within  the  Council,  regarding  the  protection  of  classified 

information exchanged in the interests of the European Union, as appropriate.  

2.  The Commission shall use a secured exchange system in order to facilitate the exchange 

of classified information and sensitive information between the Commission and Ukraine 

and, where appropriate, with the Member States. 

3.  The  Commission  shall  have  access  to  information,  including  classified  information, 

necessary for the tasks assigned to it under this Regulation, in particular for the purpose 

of  verifying  the  conditions  for  disbursement  of  payments  and  carrying  out  the  checks, 

reviews, audits, investigations, reports as well as the controls and audits, as referred to in 

Article 20. 

4. 

Information received as a result of the application of this Regulation shall be used only 

for the purpose for which it was requested.  

5.  The  Commission  and  Member  States  shall  ensure  the  protection  of  trade  and  business 

secrets  and  other  sensitive  information  acquired  and  generated  in  application  of  this 

Regulation in accordance with Union law and respective national law. 

CHAPTER VI 

FINAL PROVISIONS 

Article 29 

Exercise of the delegation 

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1.  The  power  to  adopt  delegated  acts  is  conferred  on  the  Commission  subject  to  the 

conditions laid down in this Article. 

2.  The  power  to  adopt  delegated  acts  referred  to  in  Article  13  shall  be  conferred  on  the 

Commission  for  an  indeterminate  period  of  time  from  seven  days  after  the  entry  into 

force of this Regulation. 

3.  The  delegation  of  power  referred  to  in  Article  13  may  be  revoked  at  any  time  by  the 

European  Parliament  or  by  the  Council.  A  decision  to  revoke  shall  put  an  end  to  the 

delegation  of  the  power  specified  in  that  decision.  It  shall  take  effect  on  the  day 

following the publication of the decision in the Official Journal of the European Union or 

at  a  later  date  specified  therein.  It  shall  not  affect  the  validity  of  any  delegated  acts 

already in force. 

4.  Before  adopting  a  delegated  act,  the  Commission  shall  consult  experts  designated  by 

each Member State in accordance with the principles laid down in the Interinstitutional 

Agreement of 13 April 2016 on Better Law-Making. 

5.  As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the 

European Parliament and to the Council. 

6.  A delegated act adopted pursuant to Article 13 shall enter into force only if no objection 

has been expressed either by the European Parliament or by the Council within a period 

of two months of notification of that act to the European Parliament and the Council or 

if, before the expiry of that period, the European Parliament and the Council have both 

informed the Commission that they will not object. That period shall be extended by two 

months at the initiative of the European Parliament or of the Council. 

Article 30 

Committee procedure 

1.  The Commission shall be assisted by a committee. That committee shall be a committee 

within the meaning of Regulation (EU) No 182/2011. 

2.  Where  reference  is  made  to  this  paragraph,  Article  5  of  Regulation  (EU)  No  182/2011 

shall apply. 

Article 31 

Reparations Loan dialogue 

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1. 

In  order  to  enhance  the  dialogue  between  the  Union  institutions,  in  particular  the 

European  Parliament,  the  Council  and  the  Commission,  and  to  ensure  greater 

transparency  and  accountability,  the  competent  committee  of  the  European  Parliament 

may invite the Commission to discuss the implementation of this Regulation. 

2.  The European Parliament may express its views in resolutions as regards the Reparations 

Loan. 

3.  The Commission shall take into account any elements arising from the views expressed 

through  the  Reparations  Loan  dialogue,  including  the  resolutions  from  the  European 

Parliament if provided. 

Information to the European Parliament and to the Council 

Article 32 

1. 
The  Commission  shall  inform  the  European  Parliament  and  the  Council  of 
developments regarding the implementation of this Regulation, including Article 4(4), Article 
6(1), Article 7(5), Article 11(4), Article 20(3), Article 22(2) Article 24(2), Article 25(2) and 
Article 27(1), and shall provide those institutions with the relevant documents without undue 
delay.  Information  transmitted  by  the  Commission  to  the  Council  in  the  context  of  this 
Regulation  or  its  implementation  shall  simultaneously  be  made  available  to  the  European 
Parliament, subject to confidentiality arrangements if necessary. 

By 30 June of each year, the Commission shall submit to the European Parliament and 
2. 
to  the  Council  a  report  on  the  implementation  of  this  Regulation  in  the  preceding  year, 
including an evaluation of that implementation. That report shall:  

(a) 

examine progress made in implementing the Reparations Loan; and  

assess  the  economic  situation  and  prospects  of  Ukraine,  as  well  as  progress 

(b) 
made in implementing the policy conditions referred to in Article 11(1). 

3. 
By 31 December 2031, the Commission shall submit to the European Parliament and 
to  the  Council  an  evaluation  report,  assessing  the  results  and  efficiency  of  the  Reparations 
Loan provided under this Regulation and the extent to which it has contributed to the aims of 
the assistance. 

Article 33 

Amendments to Regulation (EU) 2024/792  

Regulation (EU) 2024/792 is amended as follows: 

1. In Article 6(4) the following subparagraph is added: 

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‘Amounts made accessible pursuant to Article 8(2)(a)(ii) of Regulation (EU) [Reparations 
Loan  Regulation]  shall  be  implemented  as  additional  financial  support  pursuant  to 
Chapter  III  in  the  form  of  loans  and  shall  be  in  addition  to  the  amounts  referred  to  in 
paragraphs 2 and 3’, 

2. In Article 22, the following subparagraph is added in paragraph 2:  

‘Upon  adoption  of  the  Council  implementing  decision  referred  to  in  Article  19(1)  in 
respect  of  the  amount  referred  in  second  subparagraph  of  Article  6(4),  the  Commission 
shall enter into an amendment or addendum to a loan agreement with Ukraine referred to 
in the first subparagraph with the purpose of ensuring the implementation of the amounts 
pursuant to Chapter III, with the exception of rules on the duration and repayment of the 
loan,  which  shall  be  governed  by  the  rules  of  Regulation  (EU)  [Reparations  Loan 
Regulation].’ 

Article 34 

Entry into Force 

This  Regulation  shall  enter  into  force  on  the  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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LEGISLATIVE FINANCIAL AND DIGITAL STATEMENT 

1. 

1.1. 

1.2. 

1.3. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE ................................................. 3 

Title of the proposal/initiative ...................................................................................... 3 

Policy area(s) concerned .............................................................................................. 3 

Objective(s) .................................................................................................................. 3 

1.3.1.  General objective(s) ..................................................................................................... 3 

1.3.2.  Specific objective(s) ..................................................................................................... 3 

1.3.3.  Expected result(s) and impact ...................................................................................... 3 

1.3.4. 

Indicators of performance ............................................................................................ 3 

1.4. 

1.5. 

The proposal/initiative relates to: ................................................................................. 4 

Grounds for the proposal/initiative .............................................................................. 4 

1.5.1.  Requirement(s) to be met in the short or long term including a detailed timeline for 

roll-out of the implementation of the initiative ............................................................ 4 

1.5.2.  Added value of EU involvement (it may result from different factors, e.g. 

coordination gains, legal certainty, greater effectiveness or complementarities). For 
the purposes of this section 'added value of EU involvement' is the value resulting 
from EU action, that is additional to the value that would have been otherwise 
created by Member States alone. ................................................................................. 4 

1.5.3.  Lessons learned from similar experiences in the past .................................................. 4 

1.5.4.  Compatibility with the multiannual financial framework and possible synergies with 
other appropriate instruments ....................................................................................... 5 

1.5.5.  Assessment of the different available financing options, including scope for 

redeployment ................................................................................................................ 5 

1.6. 

1.7. 

2. 

2.1. 

2.2. 

2.2.1. 

2.2.2. 

Duration of the proposal/initiative and of its financial impact .................................... 6 

Method(s) of budget implementation planned ............................................................. 6 

MANAGEMENT MEASURES................................................................................... 8 

Monitoring and reporting rules .................................................................................... 8 

Management and control system(s) ............................................................................. 8 

Justification of the budget implementation method(s), the funding implementation 
mechanism(s), the payment modalities and the control strategy proposed .................. 8 

Information concerning the risks identified and the internal control system(s) set up 
to mitigate them............................................................................................................ 8 

2.2.3.  Estimation and justification of the cost-effectiveness of the controls (ratio between 

the control costs  and the value of the related funds managed), and assessment of the 
expected levels of risk of error (at payment & at closure) ........................................... 8 

2.3. 

3. 

3.1. 

Measures to prevent fraud and irregularities ................................................................ 9 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE ............ 10 

Heading(s) of the multiannual financial framework and expenditure budget line(s) 
affected ....................................................................................................................... 10 

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3.2. 

Estimated financial impact of the proposal on appropriations ................................... 12 

3.2.1.  Summary of estimated impact on operational appropriations.................................... 12 

3.2.1.1.  Appropriations from voted budget ............................................................................. 12 

3.2.1.2.  Appropriations from external assigned revenues ....................................................... 17 

3.2.2.  Estimated output funded from operational appropriations......................................... 22 

3.2.3.  Summary of estimated impact on administrative appropriations ............................... 24 

3.2.3.1. Appropriations from voted budget .............................................................................. 24 

3.2.3.2.  Appropriations from external assigned revenues ....................................................... 24 

3.2.3.3.  Total appropriations ................................................................................................... 24 

3.2.4.  Estimated requirements of human resources.............................................................. 25 

3.2.4.1.  Financed from voted budget....................................................................................... 25 

3.2.4.2.  Financed from external assigned revenues ................................................................ 26 

3.2.4.3.  Total requirements of human resources ..................................................................... 26 

3.2.5.  Overview of estimated impact on digital technology-related investments ................ 28 

3.2.6.  Compatibility with the current multiannual financial framework.............................. 28 

3.2.7.  Third-party contributions ........................................................................................... 28 

3.3. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

Estimated impact on revenue ..................................................................................... 29 

DIGITAL DIMENSIONS .......................................................................................... 29 

Requirements of digital relevance .............................................................................. 30 

Data ............................................................................................................................ 30 

Digital solutions ......................................................................................................... 31 

Interoperability assessment ........................................................................................ 31 

Measures to support digital implementation .............................................................. 32 

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1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative 

Proposal for a Regulation of the European Parliament and of the Council establishing 
the  Reparations  Loan  to  Ukraine  and  amending  Regulation  (EU)  2024/792  of  the 
European  Parliament  and  of  the  Council  of  29  February  2024  establishing  the 
Ukraine Facility. 

1.2. 

Policy area(s) concerned  

Economic and Financial Affairs as well as support to the Defence Industry. 

1.3. 

Objective(s) 

1.3.1.  General objective(s) 

To establish the Ukraine Reparations Loan and make available to Ukraine financial 
and economic assistance with a view to supporting Ukraine in covering its financing 
needs notably resulting from Russia’s war of aggression and Russia’s non-payment 
of  reparations  due.  The  Reparations  Loan  shall  provide  financial  and  economic 
assistance  to  Ukraine  in  a  predictable,  continuous,  orderly,  flexible  and  timely 
manner. 

1.3.2. 

Specific objective(s) 

To  support  macro-financial  stability  in  Ukraine  by  easing  its  external  and  internal 
financing constraints, and to support Ukraine’s defence industrial capacities through 
economic, financial and technical cooperation. 

1.3.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

Ukraine will be provided with sufficient and continuous financial support in response 
to and following the current crisis situation. The Reparations loan is expected to help 
support Ukraine’s budgetary and defence needs for the immediate future. 

1.3.4. 

Indicators of performance 

Specify the indicators for monitoring progress and achievements. 

The authorities of Ukraine will be required to regularly report on the implementation 
of  previously  granted  assistance  under  the  Reparations  Loan.  The  Commission 
services  will  remain  in  close  contact  with  the  Ukraine  Donor  Platform  to  benefit 
from insights from ongoing activities of the respective donors. 

As regards the objective on easing  financing  constraints,  the authorities of Ukraine 
will  be  required  to  provide  a  report  on  the  compliance  with  the  agreed  policy 
conditions  ahead  of  the  disbursement  of  the  instalment  of  the  macro-financial 
assistance.  The  Commission  services  will  continue  to  monitor  public  finance 
management,  following  the  operational  assessment  of  the  financial  circuits  and 
administrative procedures in Ukraine, which was delivered in June 2020. 

An  annual  report  on  the  implementation  of  this  Regulation  to  the  European 
Parliament and Council is foreseen. An ex-post evaluation of the Reparations Loan 
will be carried out by the Commission. 

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1.4. 

The proposal/initiative relates to:  

☒ a new action  
¨ a new action following a pilot project / preparatory action33  

¨ the extension of an existing action  

¨ a merger or redirection of one or more actions towards another/a new action 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term including a detailed timeline for 

roll-out of the implementation of the initiative 

For  the  implementation  of  the  Reparations  Loan,  the  Commission  will  enter  into  a 
Reparations  Loan  Agreement  with  Ukraine  detailing  the  financial  terms  of  the 
Reparations Loan. 

The Commission will conclude a guarantee agreement with each Member State that 
provides a guarantee setting out the rules governing the guarantee, which shall be the 
same  for  all  Member  States.  Such  guarantees  may  also  be  provided  by  third 
countries.  

Once the Reparations Loan Agreement and the necessary guarantees are in place, the 
disbursements from the Reparations Loan will be conditional on the submission and 
positive  assessment  of  a  Ukrainian  Financing  Strategy.  Furthermore,  for  budget 
assistance,  a  memorandum  of  understanding  (MoU)  must  be  agreed  between  the 
Commission and the authorities of Ukraine. Disbursements will then be conditional 
upon  relevant  conditions  for  both  budget  assistance  and  assistance  to  support 
Ukraine’s defence industrial capacities. 

The Reparations Loan will be managed by the Commission. Specific provisions on 
the  prevention  of  fraud  and  other  irregularities,  consistent  with  the  Financial 
Regulation, are applicable, including the relevant provisions on ensuring the Union’s 
financial interest as laid down in the Framework Agreement under Regulation (EU) 
2024/792. The Commission and the Ukrainian authorities would agree on the MoU 
setting out reporting requirements.  

1.5.2.  Added  value  of  EU  involvement  (it  may  result  from  different  factors,  e.g. 
coordination gains, legal certainty, greater effectiveness or complementarities). For 
the  purposes  of  this  section  'added  value  of  EU  involvement'  is  the  value  resulting 
from  EU  action,  that  is  additional  to  the  value  that  would  have  been  otherwise 
created by Member States alone. 

Reasons  for  action  at  EU  level  (ex-ante):  This  proposal  responds  to  the  need  for  a 
common  response  in  providing  support  to  Ukraine  on  an  adequate  scale,  which 
cannot  be  sufficiently  achieved  by  the  Member  States  alone  and  can  be  better 
achieved  by  the  EU.  The  main  reasons  are  the  fiscal  capacity  and  budgetary 
constraints faced at the national level and the need for strong coordination in order to 
maximise the scale and effectiveness of the support, while limiting the burden on the 
administrative  capacity  of  Ukrainian  authorities,  which  is  very  stretched  in  the 
current circumstances.  

33 

As referred to in Article 58(2), point (a) or (b) of the Financial Regulation. 

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  EN 

 
 
The  initiative  is  part  of  the  EU’s  objective  to  provide  support  to  Ukraine  and 
reinforces  actions  by  the  Union  for  economic  and  defence  support,  as  well  as  the 
Union’s initiatives to coordinate multilateral actions.  

Expected  generated  EU  added  value  (ex-post):  The  expected  EU  added  value, 
notably in comparison to other EU instruments, is to swiftly support macro-financial 
stability  via  easing  Ukraine’s  external  and  internal  financing  constraints  and  to 
support Ukraine’s defence industrial capacities - within an appropriate framework for 
reporting requirements.  

1.5.3.  Lessons learned from similar experiences in the past 

Previous  Macro-financial  assistance  operations  to  Ukraine  are  subject  to  ex-post 
evaluation.  Past  ex-post  evaluations  of  previous  macro-financial  assistance 
operations to Ukraine have shown that in general they were highly relevant in terms 
of  its  objectives,  budget  and  policy  objectives.  They  proved  crucial  to  support 
Ukraine  in  addressing  its  balance-of-payment  problems  and  implementing  key 
structural  reforms  to  stabilise  the  economy  and  enhance  the  sustainability  of  its 
external  position.  They allowed  for  fiscal  savings  and  financial  benefits,  as  well  as 
acted as a catalyst for additional financial support and investor confidence. 

1.5.4.  Compatibility with the multiannual financial framework and possible synergies with 

other appropriate instruments 

The proposal is compatible with the ceilings of the 2021-2027 multiannual financial 
framework. The Reparations Loan is also compatible with the ongoing provision of 
financial support to Ukraine through the Ukraine Loan Cooperation Mechanism and 
the related G7 ERA bilateral loans.  

The  resources  for  the  Reparations  Loan  will  be  financed  by  borrowing  through  a 
specific  form  of  debt  instrument  entered  into  between  the  Commission  and  the 
relevant financial institutions. Such borrowing will be guaranteed by Member States 
and  potentially  also  third  countries.  In  considering  the  financial  risks  and  the 
budgetary coverage, no provisioning should be constituted for the support in the form 
of loans under this Regulation, to be guaranteed over and above the ceilings, and, by 
way of derogation from Article 214(1) of Regulation (EU, Euratom) 2024/2509, no 
provisioning rate should be set.   

1.5.5.  Assessment  of  the  different  available  financing  options,  including  scope  for 

redeployment 

By  using  loans  financed  by  borrowing  regarding  cash  balances  at  financial 
institutions  in  the  Union  that  accumulate  because  transactions  regarding  the  assets 
and reserves of the Central Bank of Russia are not permitted, this operation increases 
the  effectiveness  of  the  EU’s  financial  response  and  provides  for  the  most  cost-
efficient option. Other options such as grants from Member States or borrowing by 
the  Union  supported  by  contribution  agreements  from  Member  States  would  be 
expected to entail fiscal costs for Member States. 

EN 

54 

  EN 

1.6. 

Duration of the proposal/initiative and of its financial impact 

☒ limited duration  

–  ☒  in effect from 01/12/2025 to 31/12/2030, with the exception of the designated 

budget assistance that shall be available until 31/12/2055.  

–    financial  impact  from  YYYY  to  YYYY  for  commitment  appropriations  and 

from YYYY to YYYY for payment appropriations.  

 unlimited duration 

1.7.  Method(s) of budget implementation planned  

☒ Direct management by the Commission 

–  ☒ by its departments, including by its staff in the Union delegations;  

–    by the executive agencies  

 Shared management with the Member States  

 Indirect management by entrusting budget implementation tasks to: 

–   third countries or the bodies they have designated 

–   international organisations and their agencies (to be specified) 

–   the European Investment Bank and the European Investment Fund 

–   bodies referred to in Articles 70 and 71 of the Financial Regulation 

–   public law bodies 

–   bodies governed by private law with a public service mission to the extent that 

they are provided with adequate financial guarantees 

–   bodies governed by the private law of a Member State that are entrusted with 
the  implementation  of  a  public-private  partnership  and  that  are  provided  with 
adequate financial guarantees 

–   bodies or persons entrusted with the implementation of specific actions in the 
common  foreign  and  security  policy  pursuant  to  Title  V  of  the  Treaty  on 
European Union, and identified in the relevant basic act 

–  bodies  established  in  a  Member  State,  governed  by  the  private  law  of  a 
Member  State  or  Union  law  and  eligible  to  be  entrusted,  in  accordance  with 
sector-specific  rules,  with  the  implementation  of  Union  funds  or  budgetary 
guarantees, to  the extent that such bodies are controlled by public law bodies or 
by bodies governed by private law with a public service mission, and are provided 
with adequate financial guarantees in the form of joint and several liability by the 
controlling bodies or equivalent financial guarantees and which may be, for each 
action, limited to the maximum amount of the Union support. 

Comments  

N/A 

EN 

55 

  EN 

2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

The  monitoring  and  reporting  obligations  under  Regulation  (EU,  Euratom) 
2024/2509 apply.  

The  monitoring  of  the  action  by  the  Commission  services  will  take  place  based  on 
the implementation of previously granted assistance under the Reparations Loan.  

Furthermore,  the  monitoring  of  the  action  will  take  into  consideration  the  specific 
measures to be agreed with the Ukrainian authorities in  the MoU. The Commission 
will  verify  the  fulfilment  of  the  policy  conditions  set  out  in  the  MoU.  The 
Commission will inform the European Parliament and the Council about the results 
of that verification. 

Finally, the monitoring of the action will take into consideration the engagement with 
the  Ukrainian  authorities,  including  the  respective  requests  for  funds  and  the 
information contained therein, regarding the assistance to support Ukraine’s defence 
industrial capacities. 

In order to  ensure that the European  Parliament  and the Council are  able to  follow 
the implementation of this Regulation, the Commission should regularly inform them 
of  developments  relating  to  Union  assistance  to  Ukraine  under  this  Regulation  and 
provide them with the relevant documents. 

The  Commission  should  regularly  review  the  adequacy  of  such  reporting  and 
monitoring  requirements  and  report  to  the  European  Parliament  and  to  the  Council 
thereon, thereby guaranteeing transparency and accountability. 

No  later  than  31  December  2031,  the  Commission  will  submit  to  the  European 
Parliament and to the Council an ex-post evaluation report, assessing the results and 
efficiency of the Reparations Loan provided under this Regulation and the extent to 
which it has contributed to the aims of the assistance. 

2.2.  Management and control system(s)  

2.2.1. 

Justification  of  the  budget  implementation  method(s),  the  funding  implementation 
mechanism(s), the payment modalities and the control strategy proposed 

The  actions  to  be  financed  under  this  proposal  will  be  implemented  under  direct 
management by the Commission. The financial support under the Reparations Loan 
will  be  made  available  by  the  Commission,  subject  to  the  availability  of  Member 
States’  guarantees.  The  release  of  funds  can  be  organised  swiftly  in  the  course  of 
2026, 2027 and beyond. To facilitate the Member States’ liquidity management and 
ensure predictability in cases where the guarantee is called, the Commission  should 
establish a liquidity mechanism.  

2.2.2. 

Information concerning the risks identified and the internal control system(s) set up 
to mitigate them 

The Commission shall have access to information, including classified information, 
strictly necessary for the tasks assigned to it under this Regulation, in particular for 
the  purpose  of  verifying  the  conditions  for  disbursement  of  payments  and  carrying 
out  the  checks,  reviews,  audits,  investigations,  reports  as  well  as  the  controls  and 
audits, as referred to in Article 20.  

EN 

56 

  EN 

To  protect  the  Union’s  financial  interests  linked  to  the  Reparations  Loan,  the 
Reparations  Loan  Agreement  to  be  concluded  between  the  Commission  and  the 
Ukrainian  authorities  should  contain  provisions  aligned  with 
rights, 
responsibilities and obligations provided  for in  the framework agreement  under the 
Ukraine  Facility. Ukraine  will  utilise the same management and  control systems  as 
proposed in the Ukraine Plan established under Regulation (EU) 2024/792.  

the 

Ukraine will be required to provide monthly reports providing information covering 
all payments. It will open a special account for the sole purpose of the management 
of  the  financial  and  economic  assistance  received  to  support  Ukraine’s  defence 
industrial capacities. All payments of the contracts or agreements that are requested 
for  assistance  to  support  Ukraine’s  defence  industrial  capacities  will  be  paid  from 
this account. The Commission will be granted monitoring rights of this account.   

Additionally,  if  it  has  been  established  that  Ukraine  has  engaged  in  acts  of  fraud, 
corruption or other illegal activity with respect to the management of the Reparations 
Loan, to the detriment of the Union’s financial interests, the Union can demand early 
repayment of the Reparations loan.  

In  order  to  address  the  risks  related  to  information  confidentiality,  classified 
information  that  is  created,  handled,  stored,  exchanged  or  shared  under  this 
Regulation  should  be  protected  in  accordance  with  the  security  rules  set  out  in 
Commission  Decision  (EU,  Euratom)  2015/444  or  the  Agreement  between  the 
Member  States  of  the  European  Union,  meeting  within  the  Council,  regarding  the 
protection  of  classified  information  exchanged  in  the  interests  of  the  European 
Union,  as  appropriate.  The  Commission  should  use  a  secured  exchange  system  in 
order  to  facilitate  the  exchange  of  classified  information  and  sensitive  information 
between  the  Commission  and  Ukraine  and,  where  appropriate,  with  the  Member 
States.  

The  Commission  should  use  a  secured  exchange  system  in  order  to  facilitate  the 
exchange  of  classified 
the 
information  and  sensitive 
Commission and Ukraine and, where appropriate, with the Member States.    

information  between 

2.2.3.  Estimation  and  justification  of  the  cost-effectiveness  of  the  controls  (ratio 
between  the  control  costs    and  the  value  of  the  related  funds  managed),  and 
assessment of the expected levels of risk of error (at payment & at closure)  

The  control  systems  in  place  have  ensured  an  effective  error  rate  for  the  macro-
financial  assistance  type  of  payments  so  far  of  0%.  There  are  no  known  cases  of 
fraud,  corruption  or  illegal  activity.  Operations  have  a  clear  intervention  logic,  one 
that  allows  the  Commission  to  evaluate  their  impact.  The  controls  enable  the 
confirmation of assurance and of attainment of policy objectives and priorities. 

 Measures to prevent fraud and irregularities  

The Reparations Loan Agreement to be concluded between the Commission and the 
Ukrainian  authorities  will  require  that  Ukraine  utilises  the  same  management  and 
control systems as proposed in the Ukraine Plan established under Regulation (EU) 
2024/792 that entered into force on 20 June 2024 to ensure that the Union’s financial 
interests  linked  to  the  Reparations  Loan  are  protected  efficiently,  providing  the 
appropriate  measures  relating  to  the  prevention  of,  and  fight  against,  fraud, 
corruption  and  any  other  irregularities  linked  to  the  assistance.  It  will  also,  in 
accordance  with  the  Financial  Regulation,  grant  the  necessary  rights  and  access  to 
the  Commission,  the  European  Anti-Fraud  Office  (OLAF),  the  European  Court  of 

EN 

57 

  EN 

Auditors and, where applicable, the European Public Prosecutor’s Office, including 
from third parties involved in the implementation of Union funds during and after the 
availability period of the Reparations Loan. Ukraine should also report irregularities 
in  relation  to  the  use  of  the  funds  to  the  Commission,  in  line  with  the  procedures 
the  Ukraine  Facility.
framework  agreement  under 
provided 

the 

for 

in 

EN 

58 

  EN 

3. 

3.1. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget 
line(s) affected  

•  Existing budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of 
expenditure 

Contribution  

Heading of 
multiannual 
financial 
framework 

Number  

[XX.YY.YY.YY] 

Diff./Non-
diff.34 

from 
EFTA 
countries
35 

from 
candidate 
countries 
and 
potential 
candidates
36 

From 
other 
third 
countries 

other assigned 
revenue 

Diff./Non
-diff. 

YES/NO  YES/NO  YES/NO 

YES/NO 

•  New budget lines requested  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of 
expenditure 

Heading of 
multiannual 
financial 
framework 

Number  

Diff./Non-
diff. 

from 
EFTA 
countries 

Contribution  

from 
candidate 
countries 
and 
potential 
candidates 

from 
other 
third 
countries 

other assigned 
revenue  

[XX.YY.YY.YY] 

Diff./Non
-diff. 

YES/NO  YES/NO  YES/NO 

YES/NO 

34 
35 
36 

Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidates from the Western Balkans. 

EN 

59 

  EN 

 
 
 
 
 
 
 
3.2. 

Estimated financial impact of the proposal on appropriations  

3.2.1. 

Summary of estimated impact on operational appropriations  

–    The proposal/initiative does not require the use of operational appropriations  

–    The proposal/initiative requires the use of operational appropriations, as explained below 

3.2.1.1.  Appropriations from voted budget 

Heading of multiannual financial framework  

Number 

EUR million (to three decimal places) 

DG: <…….> 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

Operational appropriations  

Budget line 

Budget line 

Commitments 

Payments 

Commitments 

Payments 

(1a) 

(2a) 

(1b) 

(2b) 

Appropriations of an administrative nature financed from the envelope of specific programmes  
Budget line 

(3) 

TOTAL appropriations 
for DG <…….> 

Commitments 

Payments 

=1a+1b+3 

=2a+2b+3 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 

operational 

appropriations  

Commitments 

Payments 

(4) 

(5) 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

EN 

60 

EN 

 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
TOTAL  appropriations  of  an  administrative  nature  financed 
from the envelope for specific programmes  

TOTAL appropriations under 
HEADING <….> 

Commitments 

of the multiannual financial framework 

Payments 

(6) 

=4+6 

=5+6 

•  TOTAL  operational  appropriations 
operational headings) 

(all 

Commitments 

Payments 

•  TOTAL  appropriations  of  an  administrative  nature  financed 
from  the  envelope  for  specific  programmes  (all  operational 
headings) 

TOTAL appropriations Under          

Heading 1 to 6 

Commitments 

of the multiannual financial framework 
(Reference amount) 

Payments 

(4) 

(5) 

(6) 

=4+6 

=5+6 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

2024 

Year 

2025 

0.000 

Year 

2026 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

2027 

0.000 

0.000 

0.000 

0.000 

TOTAL MFF 
2021-2027 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Heading of multiannual financial  framework  

7 

‘Administrative expenditure’ 

 Human resources  
 Other administrative expenditure  

TOTAL 

Appropriations  

Year 

2024 

Year 

2025 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

2026 

11.554 

0.659 

12.213 

Year 

2027 

11.554 

0.659 

12.213 

TOTAL 
MFF 2021-
2027 

23.108 

1.318 

24.426 

EN 

61 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL appropriations under HEADING 7 of the multiannual financial 
framework  

(Total 
commitments 
= Total 
payments) 

0.000 

0.000 

12.213 

12.213 

24.426 

EUR million (to three decimal places) 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

TOTAL appropriations under HEADINGS 1 to 7 

Commitments 

0.000 

0.000 

0.000 

0.000 

of the multiannual financial framework  

Payments 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

3.2.1.2.  Appropriations from external assigned revenues 

Heading of multiannual financial framework  

Number 

EUR million (to three decimal places) 

DG: <…….> 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

Operational appropriations  

Budget line 

Budget line 

Commitments 

Payments 

Commitments 

Payments 

(1a) 

(2a) 

(1b) 

(2b) 

Appropriations of an administrative nature financed from the envelope of specific programmes  
Budget line 

(3) 

TOTAL appropriations 
for DG <…….> 

Commitments 

Payments 

=1a+1b+3 

=2a+2b+3 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

Year 

Year 

Year 

TOTAL MFF 

EN 

62 

EN 

 
 
  
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
TOTAL 

operational 

appropriations  

Commitments 

Payments 

TOTAL  appropriations  of  an  administrative  nature  financed 
from the envelope for specific programmes  

TOTAL appropriations under 
HEADING <….> 

Commitments 

of the multiannual financial framework 

Payments 

TOTAL 

operational 

appropriations  

Commitments 

Payments 

TOTAL  appropriations  of  an  administrative  nature  financed 
from the envelope for specific programmes  

TOTAL appropriations under 
HEADING <….> 

Commitments 

of the multiannual financial framework 

Payments 

(4) 

(5) 

(6) 

=4+6 

=5+6 

(4) 

(5) 

(6) 

=4+6 

=5+6 

2024 

2025 

2026 

2027 

2021-2027 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Year 

2024 

Year 

2025 

0.000 

Year 

2026 

0.000 

0.000 

TOTAL MFF 
2021-2027 

0.000 

0.000 

0.000 

Year 

2027 

0.000 

0.000 

•  TOTAL  operational  appropriations 
operational headings) 

(all 

Commitments 

Payments 

(4) 

(5) 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

EN 

63 

EN 

 
 
 
  
 
 
 
 
 
 
 
 
 
•  TOTAL  appropriations  of  an  administrative  nature  financed 
from  the  envelope  for  specific  programmes  (all  operational 
headings) 

TOTAL appropriations under Headings 1 
to 6 

Commitments 

of the multiannual financial framework (Reference 
amount) 

Payments 

(6) 

=4+6 

=5+6 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

Heading of multiannual financial framework  

7 

‘Administrative expenditure’  

DG: <…….> 

 Human resources  
 Other administrative expenditure  

TOTAL DG <…….> 

Appropriations  

EUR million (to three decimal places) 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

11.554 

11.554 

0.659 

0.659 

12.213 

12.213 

TOTAL 
MFF 2021-
2027 

23.108 

1.318 

24.426 

TOTAL appropriations under HEADING 7 of the multiannual 
financial framework  

(Total 
commitments 
= Total 
payments) 

0.000 

0.000 

12.213 

12.213 

24.426 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL MFF 
2021-2027 

EUR million (to three decimal places) 

TOTAL appropriations under HEADINGS 1 to 7 

Commitments 

0.000 

0.000 

0.000 

0.000 

0.000 

of the multiannual financial framework  

Payments 

0.000 

0.000 

0.000 

0.000 

0.000 

EN 

64 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
  
3.2.2.  Estimated output funded from operational appropriations (not to be completed for decentralised agencies) 

Year  
2024 

Year  
2025 

Year  
2026 

Year  
2027 

OUTPUTS 

Commitment appropriations in EUR million (to three decimal places) 

Enter as many years as necessary to show the 
duration of the impact (see Section1.6) 

TOTAL 

o
N

Cost 

o
N

Cost 

o
N

Cost 

o
N

Cost 

o
N

Cost  N

o

Cost 

o
N

Cost 

Total 
No 

Total 
cost 

Indicate 
objectives and 
outputs  

 

Type37 

Avera
ge 
cost 

SPECIFIC OBJECTIVE No 138… 

- Output 

- Output 

- Output 

Subtotal for specific objective No 1 

SPECIFIC OBJECTIVE No 2 ... 

- Output 

Subtotal for specific objective No 2 

TOTALS 

37 
38 

Outputs are products and services to be supplied (e.g. number of student exchanges financed, number of km of roads built, etc.). 
As described in Section 1.3.2. ‘Specific objective(s)’  

EN 

65 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.3. 

Summary of estimated impact on administrative appropriations  

–    The  proposal/initiative  does  not  require  the  use  of  appropriations  of  an 

administrative nature  

–    The proposal/initiative requires the use of appropriations of an administrative 

nature, as explained below 

3.2.3.1. Appropriations from voted budget 

VOTED APPROPRIATIONS 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL 
2021 - 2027 

HEADING 7 

Human resources  

Other administrative expenditure  

Subtotal HEADING 7 

Outside HEADING 7 

Human resources  

Other expenditure of an administrative nature 

Subtotal outside HEADING 7 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

11.554 

11.554 

0.659 

0.659 

12.213 

12.213 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

23.108 

1.318 

24.426 

0.000 

0.000 

0.000 

TOTAL 

0.000 

0.000 

12.213 

12.213 

24.426 

3.2.3.2.  Appropriations from external assigned revenues 

EXTERNAL ASSIGNED REVENUES 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

TOTAL 
2021 - 2027 

HEADING 7 

Human resources  

Other administrative expenditure  

Subtotal HEADING 7 

Outside HEADING 7 

Human resources  

Other expenditure of an administrative nature 

Subtotal outside HEADING 7 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 

0.000 

0.000 

0.000 

0.000 

0.000 

VOTED APPROPRIATIONS                            

+                                                               

Year 

2024 

Year 

Year 

Year 

2025 

2026 

2027 

TOTAL 
2021 - 2027 

3.2.3.3.  Total appropriations 

TOTAL 

EXTERNAL ASSIGNED REVENUES 

HEADING 7 

Human resources  

Other administrative expenditure  

Subtotal HEADING 7 

Outside HEADING 7 

Human resources  

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

11.554 

0.659 

12.213 

11.554 

0.659 

12.213 

23.108 

1.318 

24.426 

0.000 

0.000 

0.000 

0.000 

0.000 

EN 

1 

  EN 

 
  
  
Other expenditure of an administrative nature 

Subtotal outside HEADING 7 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

0.000 

TOTAL 

0.000 

0.000 

12.213 

12.213 

24.426 

3.2.4.  Estimated requirements of human resources  

–    The proposal/initiative does not require the use of human resources  

–   The  proposal/initiative  requires  the  use  of  human  resources,  as  explained 

below 

3.2.4.1.  Financed from voted budget 

Estimate to be expressed in full-time equivalent units (FTEs) 

VOTED APPROPRIATIONS 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

 Establishment plan posts (officials and temporary staff) 

20 01 02 01 (Headquarters and Commission’s Representation Offices) 

20 01 02 03 (EU Delegations) 

01 01 01 01 (Indirect research) 

01 01 01 11 (Direct research) 

Other budget lines (specify) 

• External staff (inFTEs) 

20 02 01 (AC, END from the ‘global envelope’) 

20 02 03 (AC, AL, END and JPD in the EU Delegations) 

Admin. Support 
line 
[XX.01.YY.YY] 

- at Headquarters 

- in EU Delegations  

01 01 01 02 (AC, END - Indirect research) 

 01 01 01 12 (AC, END - Direct research) 

Other budget lines (specify) - Heading 7 

Other budget lines (specify) - Outside Heading 7 

TOTAL 

3.2.4.2.  Financed from external assigned revenues 

EXTERNAL ASSIGNED REVENUES 

 Establishment plan posts (officials and temporary staff) 

20 01 02 01 (Headquarters and Commission’s Representation Offices) 

20 01 02 03 (EU Delegations) 

01 01 01 01 (Indirect research) 

01 01 01 11 (Direct research) 

Other budget lines (specify) 

• External staff (in full time equivalent units) 

20 02 01 (AC, END from the ‘global envelope’) 

20 02 03 (AC, AL, END and JPD in the EU Delegations) 

Admin. Support 

- at Headquarters 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

44 

10 

0 

0 

0 

2 

0 

0 

0 

0 

0 

0 

0 

44 

10 

0 

0 

0 

2 

0 

0 

0 

0 

0 

0 

0 

56 

56 

Year 

2024 

Year 

2025 

Year 

2026 

Year 

2027 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

EN 

2 

  EN 

 
  
 
line  
[XX.01.YY.YY] 
01 01 01 02 (AC, END - Indirect research) 

- in EU Delegations  

 01 01 01 12 (AC, END - Direct research) 

Other budget lines (specify) - Heading 7 

Other budget lines (specify) - Outside Heading 7 

TOTAL 

3.2.4.3.  Total requirements of human resources 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

TOTAL VOTED APPROPRIATIONS                                                   

Year 
+                                                                                               
2025 

2024 

Year 

EXTERNAL ASSIGNED REVENUES 

 Establishment plan posts (officials and temporary staff) 

20 01 02 01 (Headquarters and Commission’s Representation Offices) 

20 01 02 03 (EU Delegations) 

01 01 01 01 (Indirect research) 

01 01 01 11 (Direct research) 

Other budget lines (specify) 

• External staff (in full time equivalent units) 

20 02 01 (AC, END from the ‘global envelope’) 

20 02 03 (AC, AL, END and JPD in the EU Delegations) 

Admin. Support 
line  
[XX.01.YY.YY] 

- at Headquarters 

- in EU Delegations  

01 01 01 02 (AC, END - Indirect research) 

 01 01 01 12 (AC, END - Direct research) 

Other budget lines (specify) - Heading 7 

Other budget lines (specify) - Outside Heading 7 

TOTAL 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

Year 

Year 

2026 

2027 

44 

10 

0 

0 

0 

2 

0 

0 

0 

0 

0 

0 

0 

44 

10 

0 

0 

0 

2 

0 

0 

0 

0 

0 

0 

0 

56 

56 

12 posts and 2 FTE will come from redeployments from the limited Commission redeployment pool.  

The implementation of this proposal requires 42 additional posts on top of the establishment plan, all 
to be financed by Heading 7 beyond stable staffing. A statement to this effect will be proposed as part 
of the legislative procedure. 

All staff will be financed by Heading 7.  

The staff required to implement the proposal (in FTEs):  

To be covered by 
current staff 
available in the 
Commission 
services  

Exceptional additional staff* 

To be financed 
under Heading 7 
or Research 

To be financed 
from BA line 

To be financed 
from fees 

Establishment 

12 posts 

42 posts 

N/A 

EN 

3 

  EN 

 
 
 
 
 
plan posts 

External 
staff 
(CA, SNEs, INT) 

2 CA 

Description of tasks to be carried out by: 

Officials and temporary staff 

54 officials and temporary staff to work on: 

- 
- 

Programming/expert group/Committee 
Implementation: horizontal tasks, thematic/technical expertise for EU and UA 
desks 

Financial circuit design 

-  Ukraine financing strategy 
-  Work on MFA 
-  Audit and control 
-  Legal work  
- 
-  Accounting tasks  
-  Headroom sustainability  
- 
-  Cash calls, settlement reporting, etc.  
-  Manage contracts 

Short-term borrowing (to repay financial institutions) and longer-term debt  

External staff 

2 FTE to support the work on programming/expert group/committee 

3.2.5.  Overview of estimated impact on digital technology-related investments 

Compulsory: the best estimate of the digital technology-related investments entailed 
by the proposal/initiative should be included in the table below.  

Exceptionally,  when  required  for  the  implementation  of  the  proposal/initiative,  the 
appropriations under Heading 7 should be presented in the designated line.  

The appropriations under Headings 1-6 should be reflected as “Policy IT expenditure 
on operational programmes”. This expenditure refers to the operational budget to be 
used to re-use/ buy/ develop IT platforms/ tools directly linked to the implementation 
of the initiative and their associated investments (e.g. licences, studies, data storage 
etc).  The  information  provided  in  this  table  should  be  consistent  with  details 
presented under Section 4 “Digital dimensions”. 

TOTAL Digital and IT appropriations 

Year 

Year 

Year 

Year 

2024 

2025 

2026 

2027 

TOTAL 
MFF 
2021 - 
2027 

HEADING 7 

IT expenditure (corporate)  

Subtotal HEADING 7 

Outside HEADING 7 

Policy IT expenditure on operational 
programmes 

0.000 

0.000 

0.000 

0.000 

0.443 

0.443 

0.443 

0.443 

0.886 

0.886 

0.000 

0.000 

0.000 

0.000 

0.000 

Subtotal outside HEADING 7 

0.000 

0.000 

0.000 

0.000 

0.000 

EN 

4 

  EN 

 
 
 
 
 
 
  
TOTAL 

0.000 

0.000 

0.443 

0.443 

0.886 

3.2.6.  Compatibility with the current multiannual financial framework  

The proposal/initiative: 

–    can be fully financed through redeployment within the relevant heading of the 

multiannual financial framework (MFF) 

–    requires use of the unallocated margin under the relevant heading of the MFF 

and/or use of the special instruments as defined in the MFF Regulation 

–    requires a revision of the MFF 

3.2.7.  Third-party contributions  

The proposal/initiative: 

–  does not provide for co-financing by third parties 

☒provides for the co-financing by third parties estimated below: third country countributions 
are  enabled  but  are  not  mandatory  as 
is  based  on  Member  State 
guarantees.Appropriations in EUR million (to three decimal places) 

the  proposal 

Year  
2024 

Year  
2025 

Year  
2026 

Year  
2027 

Total 

Specify the co-financing body  

TOTAL appropriations co-
financed  

3.3. 

Estimated impact on revenue  

–    The proposal/initiative has no financial impact on revenue. 

–   The proposal/initiative has the following financial impact: 

– 

– 

– 

 

 

on own resources  

on other revenue 

  please indicate, if the revenue is assigned to expenditure lines 

Appropriations 
available for the 
current financial 
year 

Budget revenue line: 

 Item 
6642  Ukraine  Loan 
Cooperation  Mechanism  — 
Assigned Revenue 

     EUR million (to three decimal places) 

Impact of the proposal/initiative39 

Year 2024 

Year 2025  Year 2026 

Year 2027 

For assigned revenue, specify the budget expenditure line(s) affected. 

39 

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net 
amounts, i.e. gross amounts after deduction of 20% for collection costs. 

EN 

5 

  EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other  remarks  (e.g.  method/formula  used  for  calculating  the  impact  on  revenue  or 
any other information). 

4. 

DIGITAL DIMENSIONS 

4.1. 

Requirements of digital relevance 

The  initiative  provides  support  to  a  third  country  and  does  not  establish  new  EU-level 
digital  public  services  for  natural  or  legal  persons  inside  the  Union.  Nonetheless,  digital 
elements are supportive for the Reparations Loan where financial assistance management, 
defence  industrial  capability  support,  and  loan  initiatives  require  information  exchange, 
verification,  storage  and  also  provision  of  information  to  the  Council  and  European 
Parliament where applicable.  

R1  –  Digital  processes  for  financing  and  implementation  (Chapter  V  and  in  particular 
Article 27) 

Description:  transmission  of  reports,  statements  or  supporting  documents  electronically 
using  secure  channels  and  Commission  systems  for  workflows  such  as  requests, 
verification, implementing decision or disbursements. 

Stakeholders:  Commission  services  and  Council;  beneficiary  authorities,  and  EEAS  for 
monitoring the preconditions defined in Article 5. 

Processes: Reporting, monitoring, financial management, information exchange. 

R2  –  Administration  of  defence-industrial  capability  support  (Chapter  IV,  in  particular 
Article 16) 

Description:  Beneficiary  authorities  must  transmit  digital  documentation  demonstrating 
progress  on  supported  defence-industrial  capabilities,  following  Commission  standard 
templates enabling automated verification. 

Stakeholders: Beneficiary authorities; Commission services. 

Processes: Monitoring of the implementation and validation of procurements in accordance 
with the Regulation. 

R3 – Administration of  Member State  and potential  third-country guarantee contributions 
(in particular Chapter V Articles 25, 26 and 27)  

Description:  Member  States  and  eligible  third  countries,  where  applicable,  submit 
information  on  guarantee  commitments  and  related  financial  data  via  secure  electronic 
channels,  enabling  the  Commission  to  maintain  an  up-to-date  digital  register  of 
contributions. 
Stakeholders: Commission services; Member States; potential contributing third countries. 
Processes: Notification; registry management; financial monitoring. 

R4  –  Exchange  with  the  European  Parliament  and  the  Council,  including  audit-relevant 
information (in particular Chapter VI Articles 31 and 32)  

Description:  The  Commission  must  provide  the  European  Parliament  and  Council  with 

EN 

6 

  EN 

 
 
 
 
 
sensitive 

information 

reports  and 
systems,  where  necessary. 
through 
Stakeholders: Commission services; European Parliament; Council; beneficiary authorities 
(upstream). 
Processes:  Reporting;  audit  information  exchange;  transmission  of  classified/sensitive 
documents. 

secure 

4.2. 

Data 

For  R1–R4,  the  data  includes  financial  figures,  disbursement  documentation,  defence-
industrial  capability  data,  guarantee  contribution  data,  and  other  information  (including 
potentially sensitive/classified material). 

Data exchanges are purpose-bound, minimal, interoperable and carried out through existing 
secure  EU  systems,  avoiding  duplicate  data  collection,  aligning  with  the  European  Data 
Strategy. 

Existing  Commission  datasets  and  reporting  channels  will  get  reused  and  the  aim  is  that 
data already submitted for disbursement or monitoring is not requested again, in-line with 
the once-only principle. 

Providers: Beneficiary authorities (R1–R2); Member States/third countries (R3). 

Recipients: Commission services; European Parliament and Council for reporting (R4). 

Triggers:  Reporting  cycles,  disbursement  requests,  guarantee  notifications,  audit 
requirements. 

Frequency: Periodic (e.g. monthly, or as otherwise defined in the Regulation), and ad hoc 
for financial or audit needs.  

4.3. 

Digital solutions 

Concerning all relevant requirements of digital relevance (R1-4), the Commission shall use 
a  secured  exchange  system  and  data  templates  in  order  to  facilitate  the  exchange  of 
classified information and sensitive information between the Commission and Ukraine and, 
where appropriate, with the Member States.  

Responsibility: Commission services and beneficiary authorities or Member States or third 
countries, where appropriate. 

AI: No AI functionality is mandated. 

Compliance: All systems shall comply with the EU cybersecurity framework, eIDAS, data-
protection rules, and Commission rules on handling classified information. 

Reusability: All digital solutions build on existing Commission infrastructure. 

4.4. 

Interoperability assessment 

The Regulation requires secure exchange of classified/sensitive information, access by the 
Commission  to  all  necessary  data  for  obligations  laid  down  in  the  Regulation,  including 
verification,  and  protection  of  data.  All  obligations  are  planned  to  be  met  using  existing 
Commission secure systems without interoperability gaps. This supports R1–R4. 

4.5.  Measures to support digital implementation 

As  the  Commission  already  provides  assistance  to  the  beneficiary  country  under  existing 

EN 

7 

  EN 

 
financial  and  operational  support  frameworks,  no  additional  digital  implementation 
measures are required for R1, R3 and R4.  For defence-industrial capability reporting (R2), 
the  Commission  may,  at  service  level,  provide  guidance  and  clarification  on  the  digital 
templates  and  secure  exchange  procedures  to  ensure  readiness  and  consistent  use  by  the 
involved parties. 

EN 

8 

  EN