US Treasury transfers $20 billion in Ukraine loan funds to World Bank facility by Reuters

Written by David Lowder

WASHINGTON (Reuters) – The U.S. Treasury said on Tuesday it had transferred the $20 billion U.S. portion of a $50 billion G7 loan to Ukraine to a World Bank intermediary fund to provide economic and financial aid to the war-torn country.

The Treasury said this amount fulfills its commitment made in October to match the European Union’s commitment to provide $20 billion in aid backed by frozen Russian sovereign assets, along with smaller loans from Britain, Canada and Japan, to help the Eastern European country fight the Russian invasion.

The disbursement before the inauguration of President-elect Donald Trump in January is intended to protect the funds from being recovered by his administration. Trump complained that the United States was providing too much aid to Ukraine, and said he would quickly end the war, without specifying how.

The $50 billion in 30-year credit will be serviced by interest income from about $300 billion in frozen Russian sovereign assets that have been frozen since the Russian invasion in February 2022. The G7 democracies discussed the plan for several months and agreed on the terms in 2019. October , before Trump was elected.

President Joe Biden’s administration initially sought to split the $20 billion loan in half, with $10 billion used for military aid and $10 billion for economic aid, but the military portion would have required congressional approval, a task made more difficult by Republicans. Sweeping electoral victory. With Tuesday’s transfer, the entire amount will be allocated for non-military purposes.

The Treasury said the money was transferred to a new World Bank fund called the “Resource Facility for Investment in Strengthening the Financial Intermediation Fund of Ukraine” (FORTIS Ukraine FIF). The World Bank’s Board of Directors approved the creation of the fund in October, with only one country, Russia, objecting.

The bank, whose charter prohibits it from dealing with any military aid, runs a similar fund for humanitarian and economic mediation in Afghanistan.

A US Treasury Department official said that US Treasury Secretary Janet Yellen personally supervised the employees who carried out the bank transfer of $20 billion to the World Bank Fund.

“These funds — paid for from windfall returns earned from frozen Russian assets — will provide Ukraine with a critical infusion of support as it defends its country against an unprovoked war of aggression,” Yellen said in a statement.

She added: “The $50 billion that the G7 is collectively providing through this initiative will help ensure that Ukraine has the resources it needs to support emergency services, hospitals and other foundations of its courageous resistance.”

The strength of the US dollar since Trump’s election victory on November 5 has reduced the loan slightly in dollar terms. According to the terms of the G7 loan, the European Union will provide 18.115 billion euros ($19.1 billion), Canada 5 billion Canadian dollars ($3.52 billion), Britain 2.258 billion pounds ($2.88 billion), and Japan 471.9 billion yen ($3.11 billion).