European Union leaders struck a deal on Friday to provide Ukraine with a 90-billion-euro loan to plug its looming budget shortfalls but failed to agree on using frozen Russian assets to come up with the funds.

The agreement – which came after more than a day of talks at a summit in Brussels – offers Kyiv a desperately needed lifeline as US President Donald Trump pushes for a quick deal to end the conflict.

"We have a deal. Decision to provide 90 billion euros of support to Ukraine for 2026-27 approved," EU chief Antonio Costa wrote on X. "We committed, we delivered."

After scrambling around for a solution, EU leaders settled on coming up with an interest-free loan backed by the bloc's common budget.

The number one option on the table had been to tap some 200 billion euros of Russian central bank assets frozen in the EU to generate a loan for Kyiv.

But that scheme fell by the wayside after Belgium, where the vast bulk of the assets are held, demanded guarantees on sharing liability that proved too much for other countries.

German Chancellor Friedrich Merz had pushed hard for the asset plan – but still said the final decision on the loan "sends a clear signal" to Russian President Vladimir Putin.

The EU estimates Ukraine needs an extra 135 billion euros to stay afloat over the next two years, with the cash crunch set to start in April.

While Kyiv may be left disappointed that the EU did not take the leap to use the Russian assets – securing financing another way will still be a relief.

Ukraine's President Volodymyr Zelensky told the leaders that Kyiv needed a decision by the end of the year and that putting his country on a firmer financial footing could give it more leverage in talks to end the conflict.

Belgian Prime Minister Bart ‌De Wever said EU leaders have avoided "chaos and division".

German Chancellor Friedrich Merz said Ukraine would only ‌have to repay the loan ‍if Russia pays reparations and that the EU reserves the right to use Russian assets for repayment if Russia fails to pay compensation. (AP/Reuters)