Ukraine has begun to receive the first funds from frozen Russian assets: what amounts are involved and where they will be spent
23 December 2024 17:45
ANALYSIS FROM 
Ukraine starts receiving the first funds from frozen Russian assets. The Executive Board of the World Bank approved the provision of $2 billion through the Policy Development Support Facility (DPL).
On December 20, the Ministry of Finance of Ukraine reportedly signed the relevant agreements with the World Bank.
These funds include:
- $1 billion in a non-repayable grant provided from the World Bank’s Special Fund (FIF) at the expense of the US contribution under the G7 initiative.
- 1.05 billion in the form of a loan secured by guarantees from the governments of Japan and the United Kingdom.
“Ukraine has fulfilled all the necessary conditions to receive these funds. We are grateful to our partners for their support in the process of economic development and recovery,” emphasized Denys Shmyhal.
Ukraine has started receiving funds from frozen Russian assets, and although this process has been going on for several months, it is gaining momentum. Andriy Novak, Chairman of the Committee of Economists of Ukraine, in an exclusive commentary for "Komersant Ukrainian", spoke about the mechanism and importance of this financial assistance for the country.
Process dynamics: why frozen assets are used in favor of Ukraine
Novak emphasized that such a process is not new, but rather a natural stage. According to him, the main source of frozen assets is European countries, where the largest amount of such resources is stored. However, the main change is that there are no longer any “red lines” on the use of these assets.
“The process has started, it is gaining momentum. Now there are no restrictions that Russian assets cannot be touched,” Novak said.
According to him, in most cases, these funds are provided to Ukraine in the form of a loan with low or no interest rates, secured by frozen Russian assets.
First steps: how countries started helping Ukraine
Novak emphasized that the first country to transfer funds from frozen Russian assets to Ukraine was one of the Scandinavian countries, either Norway or Denmark. After Russia did not show any significant reaction to this step, other countries also began to apply this practice.
“Other countries saw that Russia was not responding and started to help Ukraine using frozen Russian assets instead of spending their own budget funds,” the expert noted.
Coalition to support Ukraine: assistance from more than 50 countries
To date, more than 50 countries have joined the coalition to support Ukraine, which continues to provide financial assistance. Many of them have budgeted funds to help Ukraine for the next few years.
“These funds that Ukraine receives from international partners are growing from year to year, but they are still not enough to cover all the needs,” explained Novak.
He also emphasized that one of the solutions was the use of seized Russian assets, which allows Ukraine to receive additional funds to cover the budget deficit.
Use of funds: are there any restrictions?
Regarding the question of what exactly the funds from frozen assets can be used for, Novak noted that it depends on specific agreements concluded with international partners. Earlier, it was stated that these funds cannot be spent on weapons, but only to cover the budget deficit.
“However, given that the bulk of Ukraine’s budget deficit is due to high defense spending, these funds are in fact often spent on military needs,” explained the head of the Committee of Economists.
Novak also noted that the Ukrainian budget is receiving more and more funds from external sources, including frozen Russian assets. However, the main thing is the constant support from international partners, which allows Ukraine to make the necessary expenditures on defense and economic recovery.
“Technically, the procedure for frozen assets is important, but the main thing is the dynamics that allows Ukraine to secure the necessary financial resources for its needs,” summarized Andriy Novak.
Thus, the process of utilizing frozen Russian assets continues to gain momentum. The start of this process is not accidental, but a logical step that allows countries, including European ones, to help Ukraine without significantly affecting their budgets. Ultimately, this is beneficial to all parties, as it allows them to support Ukraine in its fight against Russia and in its recovery.
Author – Daryna Glushchenko
