The European Commission is blocking a €1.5 billion loan to Ukraine as caution prevails over the country's urgent needs, Bloomberg reports.
The European Investment Bank, an EU lending institution, has offered a loan to Kyiv. The Commission guarantees EIB loans for operations outside the EU, with reserves typically amounting to 9% of total funding. But in this case, the EC wants reserves equal to 70% of the total, as it did with the previous €1 billion offer for Ukraine, officials said. According to them, the commission puts forward a requirement in case the country cannot return the funds.
A commission spokesman said the EU needs to make sure it can cover the losses if Ukraine defaults. The commission is looking for alternative solutions to share some of the additional risk associated with these loans, the official added.
The EU itself has struggled to negotiate short-term funding for Ukraine to pay salaries and other operating expenses. The EU has already been forced to temporarily reduce the amount of emergency funding it sends to Kyiv as a €1 billion offer last week was put on hold as Germany blocked a larger package of nearly €9 billion.
A number of the bloc's allies privately criticized the EU at a donor conference in Lugano earlier this week for failing to meet its larger commitment of nearly 9 billion euros and urging it to do so urgently, the sources said.
The finance ministry in Kyiv is running out of funding options as the war drags on, leaving the country increasingly dependent on outside help. Ukrainian officials are exploring debt restructuring to ease its burden while maintaining good relations with international investors.