'Weapons production in Ukraine': What's inside the Starmer-Zelensky $2.84bn loan agreement?

Ukrainian President Volodymyr Zelensky announced a loan agreement of$2.84 billion signed with the United Kingdom (UK) will "enhance Ukraine's defence capabilities". He said this after the British Prime Minister Keir Starmer gave him a grand welcome on Saturday (March 1) post the clash between Zelensky and the US President Donald Trump in the White House.

Taking to the social media platform X, the Ukrainian president wrote, "London. Important and warm meeting with Prime Minister Keir Starmer. During our talks, we discussed the challenges facing Ukraine and all of Europe today, coordination with partners, specific steps to strengthen Ukraine's positions and end the war with a just peace, and reliable security guarantees."

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"Principled words of support from the Prime Minister and an important decision: today, in our presence, a loan agreement was signed between Ukraine and Great Britain. A loan to strengthen our defense capabilities, which will be repaid from the income received from frozen Russian assets. The money will go to the production of weapons in Ukraine. That's just: the one who started the war must pay," he added.

Zelensky further expressed gratitude towards people and the governemnt of the UK "for their great support since the beginning of this war".

"We are fortunate to have such strategic partners and a shared vision of what a secure future should look like for all," he wrote.

Where the funds will come from?

The promised funds will be pooled from the G7 Extraordinary Revenue Acceleration for Ukraine (ERA) - valued at $50 billion. Ukraine has already received $1 billion from the US and Europe under the mechanism. That was in addition to $3 billion from the European Union, according to Ukraine’s Ministry of Finance.

Where will the funds go?

A large part of the promised loan will be allocated to the ramping up weapons production inside Ukraine, as confirmed by the President Zelensky. This will be a part of a broader effort by Zelensky to encourage domestic weapon production and reducing Ukraine's reliance on external suppliers.

UK Defence Secretary John Healey said that these funds would be crucial in ensuring Ukraine can "continue its frontline fight against Russian aggression."