Hungary will withdraw its objections to creating a military aid fund for Ukraine with an annual budget of €5 billion, paving the way for an agreement to modernise the mechanism aimed at the stable supply of weapons to Kyiv.

As reported by Bloomberg, sources familiar with the discussions say that Budapest has stated it will not obstruct reaching a consensus at the European Union ambassadors' meeting on Wednesday.

This decision signifies a shift from Hungary's position earlier this week when it opposed reforming the current EU mechanism that reimburses member states for weapons they send to Ukraine.

The publication does not explain the abrupt change in Hungary's stance. However, Budapest's decision coincides with increasing pressure on Prime Minister Viktor Orbán to approve Sweden's NATO membership.

Hungary is the last country obstructing Sweden's membership, following Türkiye's support for Sweden's application earlier this week.

In December, Budapest vetoed a separate economic support package for Kyiv worth €50 billion, prompting EU leaders to reconvene on 1 February in Brussels to either reach a compromise with Hungary or bypass the Hungarian veto.

Hungary is also blocking the disbursement of the final €500 million tranche from the European Peace Facility. Foreign Minister Péter Szijjártó stated that his country might reconsider supporting the allocation after a meeting with his Ukrainian counterpart scheduled for Monday.

As was reported, the EU aims to reform the €5 billion military aid fund for Ukraine.

As part of the current funding mechanism known as the European Peace Facility, EU member states receive reimbursement for the weapons they send to Ukraine. The fund's size has been increased several times, but decisions on allocation and disbursement require unanimous support.

"A political agreement is needed as soon as possible on the proposed objective to reach an increase of the overall financial ceiling of the EPF by €5 billion, specifically dedicated to Ukraine," suggested the EU's foreign policy department.

The proposal from the EU's foreign policy department aims to reconcile different positions by changing the fund's management, including fixing reimbursement rates and providing a higher bonus for joint initiatives between European and Ukrainian industries.