Hungary’s veto blocked €90 billion in financial aid to Ukraine

Hungary has blocked an agreed European Union loan of 90 billion euros for Ukraine.

This was reported by the Financial Times, citing sources familiar with the negotiations.

According to the publication, the Hungarian ambassador to the EU opposed the mechanism that involves raising funds by issuing joint debt under the guarantees of the European Union budget for further lending to Kyiv. Such a decision requires unanimous support from all 27 member states.

EU leaders agreed a financial support package in December to help Ukraine cover its expected budget deficit by April. Hungary, Slovakia and the Czech Republic agreed to support the initiative on the condition that they would not be responsible for interest payments or loan repayments. At the same time, the European Commission needs a unanimous decision to use the EU budget reserve.

The FT notes that an €8 billion IMF program, currently under negotiation, also depends on receiving this loan. Due to the blockade, Ukraine could face financial difficulties as early as the second quarter of the year.

The veto comes amid a campaign in Hungary, with elections due in April and polls showing the opposition Tisza party ahead of Prime Minister Viktor Orban’s Fidesz party.

It was previously reported that Hungary will direct 250,000 tons of oil from its strategic reserves to the domestic market after the cessation of supplies via the Druzhba pipeline.

As a reminder, Hungary may suspend the export of electricity and natural gas to Ukraine if the transit of Russian oil through the Druzhba oil pipeline is not resumed.