EU rejects Ukraine request to bring forward 2027 funding, presses Kyiv on reforms - FT

Ukraine identified an additional $27 billion in military funding needs this summer and asked the European Commission to help cover the shortfall by frontloading part of a €90 billion EU loan agreed late last year.

The loan was designed to cover much of Ukraine’s financing needs in 2026 and 2027, with up to €45 billion available each year if Kyiv meets agreed reform milestones. Only €15.7 billion has been disbursed so far this year, partly because of delays in meeting those requirements, according to the FT.

Brussels rejected Kyiv’s request to draw on the 2027 allocation early, saying Ukraine should instead implement the reforms needed to release funding already available for 2026.

The required measures include abolishing a VAT exemption for small parcels imported from abroad and introducing new taxation rules for digital platforms.

Both measures have passed parliament, but the legislation includes an amendment weakening rules governing politically exposed persons, or PEPs. The FT reported that the provision could put Ukraine’s compliance with EU funding conditions at risk.

European Commissioners Valdis Dombrovskis and Marta Kos warned parliament speaker Ruslan Stefanchuk in a letter seen by the FT that “avoiding any weakening of Ukraine’s framework on PEPs” was “essential.”

President Volodymyr Zelenskyy told the FT that Ukraine urgently needs additional funding as Russia intensifies aerial attacks ahead of winter, including money to increase production of drones and interceptor systems.

The European Commission is also assessing Ukraine’s still-uncovered financing needs for 2027, which officials told the FT could amount to about €70 billion in military and budget support. The assessment is expected to be presented to EU leaders in mid-October.