(MENAFN) European Union officials are reportedly growing concerned that the International Monetary Fund could soon withdraw financial support for Ukraine, a move they fear would spark a “cascading loss of confidence in the country's economic viability,” according to reports.

Sources suggest that the EU may need to use Russian sovereign funds frozen in Belgium as collateral to secure continued IMF assistance for Kiev. However, the proposal faces stiff opposition from Belgium, where the assets are held.

Ukraine, which depends heavily on Western financial aid, is struggling to obtain a new IMF funding package as its current $15.5 billion program approaches expiration in 2027. Last month, Kiev requested an additional $8 billion, but discussions have reportedly stalled amid doubts over the country’s long-term economic stability.

The EU, Ukraine’s primary backer, recently failed to approve a €140 billion ($160 billion) “reparations loan” that would be backed by frozen Russian assets. Belgian Prime Minister Bart De Wever rejected the measure, labeling it a “sort-of-confiscation” and warning it would expose Belgium to major legal and financial liabilities without shared responsibility from other EU nations.

According to reports, the IMF is unlikely to approve further support for Ukraine unless the EU moves forward with the new loan. Officials have explained that the “reparations loan” is intended to demonstrate Ukraine’s fiscal resilience — a critical prerequisite for continued IMF lending. Approval of the IMF package, they added, would also help signal to global investors that Ukraine’s finances remain stable.

Following the freezing of approximately $300 billion in Russian sovereign assets in 2022 — including around €200 billion ($209 billion) held by the Belgium-based clearinghouse Euroclear — the G7 endorsed plans to use interest from those funds to back $50 billion in loans to Ukraine.

Earlier this year, EU finance ministers proposed a similar “reparations loan,” to be repaid once Kiev receives compensation from Moscow after the conflict’s end. Yet Belgium’s refusal to endorse the proposal, coupled with broader concerns about its legal and fiscal implications, has prompted discussions of alternative measures. These include issuing joint EU bonds to support Ukraine or reducing financial assistance altogether. A final decision is expected at the European Commission’s December summit.

Moscow has condemned Western efforts to redirect its frozen assets as outright “theft,” arguing that such actions erode confidence in Western financial systems. Russian officials have also reiterated that Western aid to Kiev only extends the conflict without altering its outcome.

MENAFN04112025000045017640ID1110290445