Ukraine and EU sign agreement on utilizing profits from frozen Russian assets
Minister of Finance Serhii Marchenko. Photo: Ministry of Finance
Finance Minister Serhii Marchenko established the Ukraine Loan Cooperation Mechanism (ULCM) through an agreement with the European Union. This mechanism will enable Ukraine to use frozen Russian assets to pay back loans worth up to 45 billion euros in accordance with the G7 ERA initiative.
The Ministry of Finance reported this.
"Finance Minister Serhii Marchenko signed an agreement to establish the Ukraine Loan Cooperation Mechanism (ULCM), which will create a legal framework for servicing and repaying funds received by Ukraine, which may reach up to 45 billion euros," the message says.
The new mechanism will allow the use of proceeds from frozen sovereign assets of the Russian Federation to cover the principal amount of the loan, interest, and other costs related to loans attracted from partners within the framework of the G7 ERA initiative (Extraordinary Revenue Acceleration Loans for Ukraine).
The funds available through the ULCM will be earmarked. They may be used exclusively to repay the relevant loans provided to Ukraine by creditors within the framework of the G7 ERA initiative.
As the press service of the Verkhovna Rada reported on Telegram, Ukraine's President Volodymyr Zelensky previously signed Law of Ukraine No. 4106-IX on Transactions with Contingent Liabilities.
Earlier, the head of the budget committee, Roksolana Pidlasa, explained that this law concerns non-repayable financial assistance of $50 billion from the G7 countries and the EU.
For reference:
On December 4, the Minister of Finance of Ukraine, Serhii Marchenko, the Chairman of the National Bank of Ukraine, Andrii Pyshnyi, and the Vice President of the European Commission, Valdis Dombrovskis, signed a memorandum of understanding and a loan agreement between Ukraine and the European Union to attract up to 35 billion euros in macro-financial assistance (MFA). These funds will also be provided in accordance with the new Credit Cooperation Mechanism for Ukraine.
The funds will be provided within the framework of the G7 initiative on a mechanism for additional loans to increase revenues to the Ukrainian budget.
It is noted that the final amount of MFA will be determined after the approval of the amount of loans from all parties to the initiative. Considering the proposed financing by the United States of 20 billion US dollars, macro-financial assistance from the EU may amount to 18 billion euros.
The peculiarity of this agreement is that the loan repayment will be carried out exclusively at the expense of future profits from frozen sovereign assets of the Russian Federation in the EU. This means that MFA funds for Ukraine will be provided irrevocably without involving the country's internal financial resources.
The funds will be provided through the new Ukraine Loan Cooperation Mechanism (ULCM), giving an irrevocable form of macro-financial assistance.
It is worth recalling that on June 14, at the G7 Summit in Italy, the leaders of the G7 countries agreed to allocate about 50 billion US dollars to Ukraine by the end of the year. The funds will be serviced and repaid through future profits from frozen sovereign Russian assets in the European Union and other jurisdictions.
