Malta to pay €8m interest on EU loan to Ukraine by 2028
EU countries will not shoulder upfront payments but will pay interest on a €90 billion loan
Malta will shoulder €8 million in interest payments by 2028 after EU leaders approved a €90 billion loan to support Ukraine’s struggling public finances.
Early on Friday morning, EU leaders struck a deal to provide Ukraine with the much-needed funding to allow it to plug its budget shortfall.
In practice, 24 out of the 27 EU member states (Czechia, Hungary and Slovakia opted out of the deal) agreed to raise the €90 billion on the open market and lend it to Ukraine, using the EU budget as a guarantee against the loan.
This agreement allows the EU to support Ukraine without forcing its member states to shell out funds upfront. Instead, each country will shoulder interest payments on the EU’s loan, according to its own economic strength.
The detailed terms of the loan have yet to be determined, but sources say it is likely to be a 40-year loan at an interest rate of just under four per cent.
According to sources close to negotiations, Malta’s share of the payments is estimated to be almost €8 million in the first two years, with Malta paying €2.65 million in interest in 2027 and €5.3 million in 2028.
What will happen beyond this initial two-year period remains unclear, sources say. Ukraine may end up never paying back the money: European Commission President Ursula von der Leyen has said it would only need to pay back the loan once Moscow coughs up for the damages it has wrought.
The agreement comes at the end of tetchy negotiations between EU leaders, with several countries, including Malta, objecting to the EU’s initial plans for a reparation loan, effectively diverting the funds from the €200 billion in frozen Russian assets to Ukraine.
Maltese authorities were concerned that this would breach international laws on sanctions, which state that funds seized are to be frozen, not used.
According to Politico, the plans collapsed after Belgium, which holds a vast portion of the frozen assets, insisted that EU partners provide unlimited financial guarantees to repay liabilities in case Russia comes knocking demanding its assets back.
In this scenario, Malta would have been liable to pay €210 million had Russia successfully claimed the seized funds back.
Instead, EU leaders agreed on a Plan B, borrowing money on the open market, with Ukraine drawing funds over a two-year period.
Belgian Prime Minister Bart De Wever said the collapse of the original plan was evidence that "rationality has prevailed".
"This whole business was so risky, so dangerous, and raised so many questions - it was like a sinking ship, like the Titanic. The die are cast now -- and everyone is relieved," he said.