World Bank greenlights Financial Intermediary Fund to support Ukraine, with backing from US, Japan, and Canada

The Executive Board of the World Bank approved the creation of the Financial Intermediary Fund (FIF) to support Ukraine. The United States, Japan, and Canada are expected to contribute to it.

Reuters writes about this with reference to three sources.

The World Bank will manage this fund. It should help fulfill the promise of the "Big Seven" to provide Ukraine with up to 50 billion dollars of additional financing by the end of the year.

Russia was the only country that objected to the vote.

The specific figures for the US, Japanese, and Canadian contributions are still being worked out, but they will be supported by interest from frozen Russian government assets.

The vote by the World Bank took place one day after European Union officials made a decision to grant Ukraine up to 35 billion euros in a planned loan from the G7 nations. Funds from frozen Russian Central Bank assets support this loan.

Josh Lipsky, senior director of the Atlantic Council's GeoEconomics Center, said the two actions would allow G7 countries to significantly increase funding for Ukraine and fulfill promises made at the June G7 summit.

For reference:

During the G7 Summit in Italy on June 14, the leaders of the G7 countries reached a consensus to grant Ukraine approximately $50 billion by the end of the year. This amount will be administered and reimbursed through expected returns from Russian assets that have been frozen in the European Union and other jurisdictions.

The countries of the European Union will not currently participate directly in the $50 billion loan that the "Big Seven" group plans to provide to Ukraine.

Subsequently, on June 24, the European Union countries approved the first tranche of military aid for Ukraine in the amount of 1.4 billion euros, which will come from the revenues from frozen Russian assets.

It is worth adding that 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.

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.