The European Commission is intensifying pressure on Ukraine to accelerate the reforms that are essential for unlocking roughly €20 billion in financial support, as Kyiv grapples with a widening budget deficit and an escalating Russian offensive.
"It is essential that Ukraine continues to deliver on the reforms and policy conditions jointly agreed with the European Union," a Commission spokesperson said. "Their timely implementation is key to enabling the Commission to proceed with the corresponding disbursements as planned."
The warning comes amid intense negotiations between Brussels and Ukrainian authorities to determine the precise scale of the country's financial shortfall. The International Monetary Fund, which runs a separate assistance programme, is also involved in the talks.
Zelenskyy's funding proposals face resistance
President Volodymyr Zelenskyy initially flagged a $27 billion (€23.75 billion) gap in the Ministry of Defence, a figure that caught EU officials off guard and raised questions about its origins. Separately, Ukraine faces a €32.6 billion hole in its budget for next year.
As a potential solution, Zelenskyy proposed front-loading a share of the EU's €90 billion support loan from 2027 to 2026. The loan is split into two tranches of €45 billion each, meaning any change to the timeline would leave less money available for next year. He also floated the idea of tapping into immobilised Russian assets, a controversial project that the bloc attempted and failed to implement last year.
Brussels, however, contested this logic, stressing that before requesting additional resources, Ukraine should focus on completing the reforms it has committed to approving but which remain stalled in the Verkhovna Rada, the unicameral parliament. These reforms are a precondition for accessing two financial envelopes: €13.5 billion from the support loan and €6.45 billion from the Ukraine Facility.
A combined payment of €2.9 billion was greenlighted on Thursday, but the slow legislative pace has delayed a second payment worth €3.9 billion. The situation prompted Commissioners Valdis Dombrovskis and Marta Kos to send a letter to Ruslan Stefanchuk, the speaker of the Rada, alerting him to the stakes at play.
"Timely adoption of the necessary legislation is essential to secure available EU financing, to sustain momentum on Ukraine's EU accession path and to strengthen Ukraine's economy and public finances," they wrote. "Continued dialogue with the European Commission remains crucial to ensure that the final law adopted is compliant with the EU requirements."
The letter, seen by Euronews, includes an annex of reforms "pending adoption" that Brussels wants approved and implemented in the short term. Some laws, such as those related to SME insolvency, civil service and VAT simplification, are already under consideration in the Rada. Others, such as state aid, anti-money laundering and the disciplinary system for prosecutors, have not yet been submitted.
One piece of legislation, designed to remove the duty-free exemption for international parcels, has proven particularly contentious among Ukrainian legislators due to the popularity of Chinese marketplaces Temu and AliExpress in the country. The bill was rejected twice in the Rada, earning a rebuke from Brussels. It was adopted on first reading last week, but another reading is still needed.
Further reforms are required to unlock the remaining €17 billion available for this year. The Rada is currently on recess until mid-October, though the speaker has said he is ready to call an extraordinary session as soon as the legislation is ready.
Ursula von der Leyen raised the issue of reforms when she met with Zelenskyy on the sidelines of the UN General Assembly in New York earlier this week. Following a Bloomberg report that described the meeting as "tense", Zelenskyy said the talks with the Commission chief had been "absolutely positive". The Ukrainian president asked Brussels to be more flexible regarding the timeline and to take into consideration that the Rada's activity has been affected by airstrikes.
"Ukraine has demonstrated a remarkable capacity to pursue and implement far-reaching reforms in the face of Russia's war of aggression for more than four years. We recognise these considerable efforts, undertaken under extraordinarily difficult circumstances," the Commission spokesperson said in response to Zelenskyy's comments.
The standoff highlights the broader challenge of balancing financial support with accountability, a theme that also resonates in other EU budget discussions, such as the recent release of funds for Hungary after rule-of-law reforms. As Brussels seeks to safeguard its fiscal credibility, the outcome of these negotiations will be closely watched in capitals from Berlin to Paris, and beyond.
