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G7 consents Ukraine loan with ‘stolen’ Russian assets
(MENAFN) The leaders of the G7 nations have reached a consensus to extend a substantial loan to Ukraine, which will be supported by the earnings generated from Russian sovereign assets that have been frozen by Western countries. This decision follows a previous commitment made in June, where G7 members pledged a total of USD50 billion to support Ukraine, with plans for repayment sourced from Russian funds.
Since the escalation of the conflict in Ukraine in February 2022, the US and its allies have effectively blocked approximately USD300 billion belonging to the Russian central bank. The majority of these funds, estimated at EUR197 billion (about USD213 billion), are currently held at Euroclear, a Brussels-based clearinghouse. As of mid-July, these impounded Russian assets have accrued significant interest, amounting to approximately EUR3.4 billion (or USD3.7 billion).
In a recent meeting of G7 finance ministers held in Washington, the group reiterated that the loans to Ukraine would be serviced and repaid through future extraordinary revenue generated from these frozen Russian sovereign assets. The G7 statement outlined an intention to commence disbursement of these funds by the end of the year. The financing will be executed through a series of bilateral loans, which are set to begin as early as December 1 and continue until the end of 2027.
On Wednesday, US President Joe Biden characterized this initiative as a “historic decision,” announcing plans to provide USD20 billion in loans to Ukraine, with repayment to be sourced from the interest accrued on the immobilized Russian assets. Following this, UK Chancellor of the Exchequer Rachel Reeves declared that the UK would also contribute a £2.26 billion (USD2.94 billion) loan to Ukraine using a similar repayment mechanism.
This coordinated effort by the G7 represents a significant financial strategy aimed at supporting Ukraine amidst ongoing conflict, leveraging assets that are currently unavailable to their original owner, Russia.
Since the escalation of the conflict in Ukraine in February 2022, the US and its allies have effectively blocked approximately USD300 billion belonging to the Russian central bank. The majority of these funds, estimated at EUR197 billion (about USD213 billion), are currently held at Euroclear, a Brussels-based clearinghouse. As of mid-July, these impounded Russian assets have accrued significant interest, amounting to approximately EUR3.4 billion (or USD3.7 billion).
In a recent meeting of G7 finance ministers held in Washington, the group reiterated that the loans to Ukraine would be serviced and repaid through future extraordinary revenue generated from these frozen Russian sovereign assets. The G7 statement outlined an intention to commence disbursement of these funds by the end of the year. The financing will be executed through a series of bilateral loans, which are set to begin as early as December 1 and continue until the end of 2027.
On Wednesday, US President Joe Biden characterized this initiative as a “historic decision,” announcing plans to provide USD20 billion in loans to Ukraine, with repayment to be sourced from the interest accrued on the immobilized Russian assets. Following this, UK Chancellor of the Exchequer Rachel Reeves declared that the UK would also contribute a £2.26 billion (USD2.94 billion) loan to Ukraine using a similar repayment mechanism.
This coordinated effort by the G7 represents a significant financial strategy aimed at supporting Ukraine amidst ongoing conflict, leveraging assets that are currently unavailable to their original owner, Russia.
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