The Ministry of Finance of Ukraine and the World Bank sign a $15 billion grant agreement from the United States
30 December 2024 13:56
Minister of Finance of Ukraine Sergii Marchenko and World Bank Regional Director for Eastern Europe Bob Som have signed a grant agreement under the Bank’s project “Public Expenditure Support for Sustainable Governance in Ukraine” (PEACE in Ukraine). This was reported by the Ministry of Finance of Ukraine, "Komersant Ukrainian" reports.
The amount of funds provided is USD 15 billion. They are secured by future income from the frozen assets of the Russian Federation.
Funding is provided by the US contribution totaling USD 20 billion under the G7 Extraordinary Revenue Acceleration Loans for Ukraine (ERA) initiative.
Funds from the United States under PEACE in Ukraine will be used to:
– paying salaries to healthcare, education, first responders and civil servants;
– assistance to low-income families, IDPs, people with disabilities, and families with children (during pregnancy and childbirth, at birth, adoption, single mothers).
“We are entering 2025 with confidence in the timely and full funding of all the basic needs of the social and humanitarian sectors,” said Minister of Finance of Ukraine Sergii Marchenko.
How much has the Ukrainian budget already received from the US?
From 2022 to 2024, direct budgetary support for Ukraine from the United States exceeded USD 30 billion. These funds helped the Ukrainian government to pay salaries to employees of state institutions that provide basic public services to the population of Ukraine, to maintain the continuity of the state’s functioning and financial stability of Ukraine in the context of a full-scale war.
How the G7 Initiative (ERA) works
The G7 Extraordinary Revenue Acceleration for Ukraine (ERA) mechanism of up to USD 50 billion provides for the allocation of loans to Ukraine to be repaid from future profits generated from immobilized Russian sovereign assets.
The G7 leaders reached a consensus to provide Ukraine with about $50 billion in loans backed by the proceeds of frozen Russian sovereign assets at their summit in late October.
“These loans will be serviced and repaid from future flows of extraordinary proceeds arising from the freezing of Russian sovereign assets,” the G7 statement said.
As reported by Reuters, each bilateral loan will come into effect no later than June 30, 2025, giving G7 members some flexibility in time to agree on the details.
The US Treasury announced a $20 billion loan to Ukraine as part of the G7 initiative, which provides for a total of $50 billion in aid from the proceeds of frozen Russian assets, on December 10. According to the US Treasury Department, the loan is allocated under the G7’s Extraordinary Revenue Acceleration (ERA) initiative. The EU, the UK, Canada, and Japan are also making their contributions.
“The $50 billion dollars the G7 is collectively providing through this initiative will help ensure that Ukraine has the resources it needs to support emergency services, hospitals, and more essential to its brave resistance,” U.S. Treasury Secretary Janet Yellen said at the time.
Ukraine has already received the first tranche of USD 1 billion out of USD 20 billion through the World Bank’s Second Growth Foundations Development Policy Loan (DPL) program.
Ukraine has also signed an agreement with the EU to establish a Credit Cooperation Facility for Ukraine, which will allow the use of proceeds from frozen Russian assets to repay loans under the G7 ERA initiative.
