The funds transfer to Ukraine is expedited before the incoming Trump administration.
The US Treasury announced a $20 billion loan disbursement to Ukraine on Tuesday, utilizing interest from frozen Russian assets. This loan, roughly half of Ukraine’s current budget shortfall, is part of a larger $50 billion G7 loan agreement.
The Treasury’s statement confirmed the funds were deposited into a World Bank account for onward transfer to Ukraine. The EU will contribute an additional $20 billion, with Britain, Japan, and Canada adding $10 billion, totaling $50 billion in theoretical repayment over 40 years.
This pre-Trump administration transfer prevents potential cancellation or amendment of the loan terms, which could have been used as leverage to pressure Ukrainian President Zelensky into peace negotiations with Moscow.
The previous week, President Biden approved a $725 million military aid package for Ukraine and imposed further economic sanctions on Russia.
“President Biden is committed to ensuring every available dollar is disbursed before January 20,” Secretary of State Antony Blinken told reporters last month.
Treasury Secretary Janet Yellen stated the $20 billion credit transfer “provides Ukraine with critical support” and “helps ensure Ukraine has the resources necessary to maintain emergency services, hospitals, and other essential components of its courageous resistance.”
Since 2022, Ukraine’s government, military, and public services have relied entirely on foreign aid. The conflict with Russia has severely strained the country’s finances. Last month, Zelensky signed the country’s 2024 budget into law, projecting $49 billion in revenue and $87 billion in expenditures, resulting in a $38 billion deficit.
The loan, with the US portion covering slightly more than half of this deficit, will be repaid using interest generated from Russia’s frozen sovereign assets. An estimated $300 billion in Russian central bank assets were frozen by the US and its allies following the February 2022 escalation of the Ukraine conflict.
The International Monetary Fund (IMF) has cautioned that seizing Russian assets could erode global confidence in the US and its allies. The Kremlin has repeatedly condemned the asset freeze as “theft,” claiming that accessing these funds is illegal and sets a dangerous precedent.