A view of an office building of FSD (Fondation Suisse de Déminage), a non-governmental humanitarian organisation damaged during a Russian missile attack in Kharkiv, Ukraine on July 24, 2024. (Photo: REUTERS)

The loan, which was announced while the bloc's Commission chief was on a visit to Kyiv, is part of a wider plan among G7 nations to raise funds using proceeds from Russian frozen assets.

The Group of Seven countries (G7) froze around 300 billion USD worth of Russian financial assets soon after the Russia-Ukraine conflict broke out in 2022.

The EU in May struck a deal among its member states under which 90% of the proceeds would go into an EU-run fund for military aid for Ukraine, with the other 10% going to support Kyiv in other ways.