US delivers first $ 1 billion from frozen Russian asset proceeds to Ukraine

This marks the first time frozen Russian assets have been used to support Ukraine's state budget.

Dec 24, 2024 - 22:00

US delivers first $ 1 billion from frozen Russian asset proceeds to Ukraine

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Ukraine received $1 billion from the United States, funded by revenues from frozen Russian assets, Ukrainian Prime Minister Denys Shmyhal reported on Telegram on 24 December. The Finance Ministry stated that this marks the first time Ukraine’s state budget has been funded using proceeds from frozen Russian assets.

Approximately $281 billion in Russian assets, including Central Bank reserves, have been frozen under sanctions following Russia’s full-scale invasion of Ukraine in February 2022. While the G7 and EU, which hold most of these assets, agreed to back a $50 billion loan to Ukraine with proceeds from the funds, they have hesitated to grant direct access. EU’s new top diplomat, Kaja Kallas, has urged the bloc to use these frozen Russian state funds directly to aid Ukraine.

According to the Finance Ministry, the funding comes through the World Bank’s Second Growth Foundation Development Policy Loan and represents the first tranche of a $20 billion US Extraordinary Revenue Acceleration loan. This initiative is part of the broader G7 commitment to provide Ukraine with $50 billion secured by proceeds from immobilized Russian sovereign assets.

The funds are being disbursed through the World Bank’s Facilitation of Resources to Invest in Strengthening Ukraine Financial Intermediary Fund (FORTIS Ukraine FIF). The United States Agency for International Development (USAID), in coordination with the US Treasury and State Department, provided the grant, adding to approximately $30 billion in direct budget support delivered to Ukraine between 2022-2024.

Ukraine’s Minister of Finance Serhii Marchenko stated:

“For the first time, Ukraine is receiving funds financed by proceeds from the frozen assets of russia. I am deeply grateful to the United States for its quick decision-making and adaptable solutions in support of Ukraine.”

The Development Policy Loan supports systemic reforms in Ukraine, with funds released upon completion of agreed reform milestones. Key areas include railways, customs and tax policy, anti-corruption measures, state-owned enterprises, and private sector development.

The Finance Ministry reports that transparency in budget support usage will be monitored through cooperation with the USAID SOERA project and DBS Audit Activity.

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