G-7 to agree more than $26 billion in short-term aid for Ukraine

A destroyed home in the village of Vilkhivka, east of Kharkiv, on May 19, 2022. PHOTO: NYTIMES

COLOGNE (BLOOMBERG) - The Group of Seven industrialised nations will agree on more than €18 billion (S$26 billion) in aid for Ukraine to guarantee the short-term finances of the government in Kyiv, according to German Finance Minister Christian Lindner.

"We have to guarantee the capability of Ukraine to defend itself so we are here fundraising to secure the liquidity of the Ukrainian government," Mr Lindner said on Friday (May 20) in an interview with Bloomberg Television on the sidelines of a meeting of G-7 finance ministers near Bonn.

"It appears that there will be more than €18 billion we can raise to support Ukraine in this crucial historical moment," he added.

The cash includes US$7.5 billion committed by the US and money from the European Union, Mr Lindner said, adding that "there shouldn't be a concern of the Ukraine government to finance their state needs" in coming months.

The Ukrainian government has said that the country needs US$4 billion to US$5 billion per month in short-term funding, while over the longer term it will require a recovery strategy similar to the Marshall Plan for Europe after World War II.

The overall reconstruction effort will cost US$600 billion, the nation's prime minister said last month. The International Monetary Fund expects Ukraine's economy to contract 35 per cent in 2022 as a direct result of the war.

"I think it's a very good signal that the G-7 nations are standing shoulder to shoulder with Ukraine because they are not only defending themselves, they are defending our values," Mr Lindner told Bloomberg.

"We are standing ready to observe the situation but I think at the moment we made very important progress on guaranteeing the liquidity of Ukraine."

G-7 leaders will gather in Bavaria, Germany at the end of June, where a bigger aid package is due to be decided.

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