G-7 leaders agree on how to deliver around $66 billion in loans to Ukraine

ROME - Leaders of the Group of Seven (G-7) wealthy nations have reached consensus on how to deliver around US$50 billion (S$66 billion) in loans to Ukraine backed by earnings from frozen Russian sovereign assets, a statement said on Oct 25.

“These loans will be serviced and repaid by future flows of extraordinary revenues stemming from the immobilisation of Russian Sovereign Assets,” the G-7 statement said.

“Our aim is to begin disbursing the funds by the end of the year,” said the statement, which was released as global finance chiefs were meeting in Washington for International Monetary Fund (IMF) and World Bank annual meetings.

An accompanying statement from G-7 finance ministers said the loans would be disbursed through a series of bilateral loans, starting as soon as Dec 1 and continuing until the end of 2027 “in installments that will reflect Ukraine’s urgent financing needs”.

Each bilateral loan would enter into force no later than June 30, 2025, which provides some timing flexibility for G-7 members to arrange details.

The statement announcing the principles and some technical details did not provide specific amounts for the bilateral loans, but said additional details will be issued in a term sheet to be distributed in coming days.

The US on Oct 23 announced it would give Ukraine a US$20 billion loan during December, timing meant to shield the loan funds from a potential claw-back should Republican presidential candidate Donald Trump win the November US election.

Trump has vowed to “get out” of Ukraine’s war with Russia. The next US president will not take office until January.

Another US$20 billion loan is expected to come from the EU, home to G-7 members Germany, France and Italy, with the remaining US$10 billion split between Canada, Britain and Japan.

“We will stand by Ukraine for as long as it takes,” the finance ministers’ statement said.

The loans will be disbursed through multiple channels, including a Macro-Financial Assistance Loan from the EU, the IMF’s Multi-Donor Administered Account for Ukraine and a newly created Financial Intermediary Fund for Ukraine at the World Bank, the statement said.

The G-7 leaders agreed during their annual summit in southern Italy in June to provide loans to be backed by interest accrued from the blocked Russian funds, but left many technical details to be hammered out.

Some €260 billion (S$371 billion) in Russian assets such as central bank reserves were frozen under sanctions imposed following

Moscow’s invasion of Ukraine in February 2022.

The vast majority of those assets are held in Euroclear, a Belgium-based central securities depository, making the EU a key player in any plan to make use of the assets.

“The G-7 remains steadfast in its solidarity to support Ukraine’s fight for freedom, and its recovery and reconstruction,” the G-7 statement said, adding that “time is not on (Russian) President Putin’s side”. REUTERS