The G7 has finalized a $50bn loan to Ukraine, backed by profits from the Russian central bank’s frozen assets, paving the way for much-needed aid to flow into Kiev soon and largely shielding the critical funding from the outcome of the US presidential election.
“Today, we, the G7 leaders, reached a consensus on how to provide approximately $50 billion in emergency revenue acceleration loans to Ukraine,” the G7 leaders said in a joint statement. “The proceeds of the loans will be disbursed through multiple channels to support Ukraine’s fiscal, military and reconstruction assistance.”
The agreement came after the US and its allies overcame issues over how to structure such a loan and, more importantly, how to ensure that it is repaid so as not to burden their taxpayers.
The US has said it will provide $20 billion, while Europe is expected to contribute around the same amount and the UK has said it will put in about $3 billion. Canada and Japan are also expected to contribute.
Under the agreed mechanism, the US, the EU and other G7 countries will provide a loan to Ukraine, which will be repaid using profits from the roughly $280 billion in pledged funds, most of which are in immobilized in Europe.
The aim is to use the loan as a signal of the West’s continued support for Kiev and to send a message to Russian President Vladimir Putin. “We will not waver in our determination to give Ukraine the support it needs to prevail,” the G7 leaders said in their statement.
The US expects to disburse at least half of its share of $20 billion in a World Bank vehicle – which will manage US loans – this December, and possibly even the entire amount. Such a schedule would mean the US could have disbursed its entire share before the next administration takes office in 2025.
The loan agreement caps a year of intense US diplomatic efforts to persuade its allied counterparts, particularly in Europe, to tap the economic value of these assets.
While the initial U.S.-led push to immediately seize the frozen funds met with much resistance, talks on using the assets to bring value to Ukraine picked up speed, especially as the political environment on both sides of the Atlantic raised questioning further taxpayer-funded aid.
SOURCE: ot.gr
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