The cash transfer comes as Washington attempts to fast-track aid to Kiev before Donald Trump takes office
The US Treasury Department announced on Tuesday that it had disbursed a $20 billion loan for Ukraine, backed by interest from frozen Russian assets. The money, which covers around half of Kiev’s current deficit, is part of a broader $50 billion G7 loan deal.
The money was paid into a World Bank fund that will transfer it to Kiev, the Treasury said in a statement. The EU will contribute an additional $20 billion to this fund, while G7 members Britain, Japan and Canada will add another $10 billion, for a total of $50 billion that Ukraine will theoretically repay over 40 years.
By handing over the money before President-elect Donald Trump takes office in January, the Treasury Department has ensured that Trump will not be able to cancel or amend its terms, a step that would be potentially be taken as leverage to force Ukrainian leader Vladimir Zelensky to negotiate a peace deal with Moscow.
One week earlier, President Joe Biden authorized a new $725 million military aid package for Ukraine, and imposed additional economic sanctions on Russia.
“President Biden has committed to making sure that every dollar we have at our disposal will be pushed out the door between now and January 20,” Secretary of State Antony Blinken told reporters last month.
Treasury Secretary Janet Yellen said that the $20 billion credit transfer “will provide Ukraine a critical infusion of support” and “will help ensure Ukraine has the resources it needs to sustain emergency services, hospitals and other foundations of its brave resistance.”
Ukraine’s government, military, and public services have been entirely dependent on foreign aid since 2022, and the cost of sustaining the conflict with Russia has driven the country’s finances into disarray. Last month, Zelensky signed the country’s state budget for next year into law. The budget anticipates revenues of $49 billion and expenditures of $87 billion, putting the overall deficit at $38 billion.
The loan – the US component of which covers just over half of this deficit – will be repaid using interest earned from Russia’s immobilized sovereign assets. An estimated $300 billion in assets belonging to the Russian central bank were frozen by the US and its allies following the escalation of the Ukraine conflict in February 2022.
The International Monetary Fund (IMF) has warned that the seizure of Russian assets will undermine global confidence in the US and its allies, while the Kremlin has repeatedly denounced the asset freeze as “theft” and argued that tapping into these funds would be illegal and set a dangerous precedent.
