The European Commission has proposed an extra €9 billion in EU loans to Ukraine in 2022 to keep the country running and to set up a 'RebuildUkraine' Facility of grants and loans.

This will be modelled on the EU's own recovery fund.

The money would be borrowed by the Commission on the market against guarantees from EU governments under its macro-financial assistance programme to keep Ukraine going until the end of June as it struggles to fight off Russia's invasion.

The International Monetary Fund estimates Ukraine needs around $5 billion a month for basic operations and the EU expects the US and other G7 countries Britain, Japan and Canada to chip in.

The G7 will discuss it at a meeting in Bonn tomorrow and Friday.

"The EU will continue to provide short-term financial support to Ukraine to meet its needs and keep basic services running," Commission head Ursula von der Leyen said.

"We stand ready to take a leading role in the international reconstruction efforts to help rebuild a democratic and prosperous Ukraine. This means investments will go hand-in-hand with reforms that will support Ukraine in pursuing its European path," she said.

The EU has already provided €4.1 billion to Ukraine since Russia invaded on February 24, including military aid.

The reconstruction of Ukraine after the war will be a much bigger challenge, which some economists estimate at between €1-€2 trillion, though no estimate can be reliable while the war is going on.

The Commission proposes to set up the 'RebuildUkraine' Facility as the main instrument for EU, through a mix of grants and loans and embedded in the EU budget.

It would build on the EU's experience of its own post-Covid recovery facility, but be adapted to the "unprecedented challenges" of reconstructing Ukraine.

"The facility itself would have a governance structure ensuring full ownership by Ukraine," the Commission said.

The EU's Recovery and Resilience Facility is part of a €800 billion scheme of grants and loans to help EU countries rebuild economies greener and more adapted to the digital age. The scheme's major novelty is that the money is jointly borrowed and repaid by all 27 EU countries.

Additional grants for Ukraine could be financed either by further contributions from EU members or third countries, as well as existing EU programmes.

"Given the scale of the loans that are likely to be required, options include raising the funds for the loans on behalf of the EU or with member states national guarantees," the Commission said.

It is not clear how much support the financing scheme will get because some EU countries, like Germany, oppose new joint EU borrowing.

Another option could be to confiscate frozen Russian assets in the EU and put them at Ukraine's disposal. But officials warn this is legally complicated as the EU does not have laws for such a move.