Ukraine to receive $50 bln loan from G7, secured by frozen Russian assets – Bloomberg

The G7 countries agreed on a loan structure based on the size of their economies to provide Ukraine with about $50 billion in new aid, which will arrive by the end of 2024.

The Bloomberg agency reports this with reference to its sources.

The G7 nations are offering Ukraine loans, which will be paid back using the profits earned from frozen funds totaling around $280 billion, mainly located in Europe.

This agreement is expected to support Ukraine in the medium term and help cover its financial needs through 2025 and beyond.

According to the mechanisms to be signed in Italy, the United States, the European Union, and other participants will provide Ukraine with a loan, and the income received from the assets over time will be used to return this money, agency sources said.

Loans will be structured differently based on each participant's internal procedures, and each will bear the risk on the loans provided if the frozen assets produce less profit than expected.

According to reports, the remaining technical aspects will be finalized during the summit. The assistance will help strengthen Ukraine's defense, economy, and reconstruction efforts. The agreement details may be subject to revision during the leaders' meeting on Thursday.

For the G7, this step signals to the Russian Federation that they are ready to support Ukraine in the long term.

It should be noted that the G7 negotiators have been discussing for some time how to best use Russian assets worth about $300 billion, which were frozen after Moscow invaded Ukraine in February 2022.

The United States is ready to lend Ukraine $50 billion, which will be repaid with profits from frozen Russian assets, provided that the European Union can extend sanctions against Moscow indefinitely.

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On February 24, the Group of Seven (G7) countries released a statement confirming that they would keep Russian assets frozen in their jurisdictions until the end of Russia's full-scale war against Ukraine.

It's important to note that the European Union has drafted a legislative proposal to allow Ukraine to begin receiving profits from the frozen assets of the Russian Central Bank as early as July. These funds will be used for the purchase of weapons and the advancement of the defense industry.

On March 19, the Head of Diplomacy of the European Union, Josep Borrell, proposed to use 90% of the revenues from the Russian Federation's assets frozen in Europe to purchase weapons for Ukraine through the European Peace Fund.

On May 8, EU permanent representatives agreed to use the proceeds from frozen Russian assets to support the recovery of Ukraine and its military defense against Russian aggression.

According to open information, Euroclear currently has 192 billion euros of Russian Central Bank assets on its balance sheet. The EU is looking for legal mechanisms to deal further with these frozen resources and the interest accrued on them, which has reached €5 billion over the past two years.