European Union member states reached an agreement Wednesday to provide Ukraine with a €35 billion ($38.2 billion) loan backed by the proceeds from frozen Russian assets as part of a G7 commitment.

In a statement, the European Council announced that member states have agreed on a new financial aid package.

The package includes an exceptional €35 billion macro-financial assistance loan to Ukraine and a mechanism to support the country in repaying up to €45 billion in loans provided by the EU and G7 partners.

The statement emphasized that the financial aid will address Ukraine's urgent financing needs, while income streams from the frozen Russian assets will be used for the repayment of loans from the EU and G7 partners.

It was also noted that the €35 billion loan represents the EU's contribution to the total €45 billion in G7 loans and will include various provisions related to management, control systems and measures to prevent irregularities.

The statement highlighted that borrowing to finance the EU loan to Ukraine will be backed by a guarantee from the EU budget, with the aim of making the loan available this year.

The statement further recalled that after this stage, the approval of the European Parliament is required to finalize the loan.

In June, G7 leaders reached an agreement to provide Ukraine with a $50 billion loan using profits from frozen Russian assets as collateral.

Since the start of the Russia-Ukraine war, Western countries have frozen approximately $300 billion worth of Russian assets, with around $200 billion of that held in EU countries.

The frozen assets generate billions of dollars in interest each year. The G7 countries, led by the US, intend to use this income to support Ukraine.