Portugal Colonial - EU aims to start disbursing new Ukraine loan in second quarter

EU economy commissioner Valdis Dombrovskis was speaking on the sidelines of the International Monetary Fund and World Bank's spring meetings, which brought finance ministers, central bankers and other leaders to the US capital this week.

"Our support for Ukraine, also continued pressure and sanctions against aggressor Russia, was very much part of the agenda of these meetings," Dombrovskis said.

He warned that Moscow was "emerging as a winner from this war in Iran, because it provides windfall profits to feed Russia's war machine."

War in the Middle East, support for Ukraine and cooperation on critical minerals were key topics of discussion in Washington this week, particularly among G7 finance leaders.

On the EU side, Dombrovskis said, "election results in Hungary allow us now to unblock our 90-billion-euro ($106 billion) support package for Ukraine for this year and next."

"We are aiming for the first tranche of our Ukraine support loan to be transferred to Ukraine still in the second quarter of this year," he added.

The loan is meant to address two-thirds of Ukraine's financing needs.

EU officials will visit Hungary on Friday for talks with Peter Magyar's incoming government, with his victory sparking hope that key EU initiatives blocked by Viktor Orban, such as support for Ukraine, will soon go through. Magyar is set to take power next month.

Following his meetings, Dombrovskis flagged willingness from other partners to provide assistance: "One can be quite confident that we will be able to cover the entire Ukraine financing need."

- 'High uncertainty' -

On the Middle East war, Dombrovskis said the economic outlook is "subject to very high uncertainty."

Fallout depends on how long the conflict will last, the degree of energy price shocks, and whether the strategic Strait of Hormuz is reopened.

US-Israeli strikes targeting Iran began on February 28, triggering Tehran's retaliation in virtually blocking off the strait, a key shipping route for oil and gas supplies.

Oil prices have since surged.

Dombrovskis said he expects the EU economy could see a slowdown between 0.2- and 0.6-percentage points, with higher inflation.

M.Gameiro--PC