US Treasury Disburses $20 Billion Loan to Ukraine Backed by Frozen Russian Assets

The US Treasury Department announced on Tuesday the disbursement of a $20 billion loan to Ukraine, utilizing interest generated from frozen Russian assets. This funding, aimed at covering approximately half of Ukraine’s current budget deficit, forms part of a larger $50 billion loan package orchestrated by the G7 nations.

The funds were deposited into a World Bank-managed account for subsequent transfer to Kyiv, according to a Treasury statement. The European Union will contribute an additional $20 billion to the initiative, while G7 members Britain, Japan, and Canada will collectively provide $10 billion. The $50 billion package is structured as a long-term loan, with a repayment period extending over 40 years.

The disbursement was expedited to ensure its execution before President-elect Donald Trump assumes office in January, effectively safeguarding the agreement from potential amendments or cancellation. Adjustments to the terms could have been leveraged to pressure Ukrainian President Volodymyr Zelensky into negotiations with Moscow.

This announcement follows President Joe Biden’s authorization of a $725 million military aid package for Ukraine last week, along with the imposition of additional economic sanctions on Russia. Secretary of State Antony Blinken had previously affirmed the administration’s commitment to mobilizing all available resources before the presidential transition.

“Treasury Secretary Janet Yellen emphasized the significance of this credit transfer, stating that it will provide Ukraine with a critical infusion of support to sustain emergency services, hospitals, and other essential infrastructure underpinning the nation’s resistance efforts.”

Since 2022, Ukraine’s government, military, and public services have relied heavily on international aid as the ongoing conflict with Russia continues to strain the country’s financial stability. Ukraine’s state budget for the upcoming fiscal year, signed into law by President Zelensky last month, anticipates revenues of $49 billion against expenditures of $87 billion, leaving an overall deficit of $38 billion.

The US loan, covering just over half of this deficit, will be repaid through interest accrued from frozen Russian sovereign assets. These assets, totaling an estimated $300 billion, were immobilized by the US and its allies in response to Russia’s actions in Ukraine in February 2022.

This significant financial commitment underscores the coordinated international effort to bolster Ukraine’s economic resilience amid ongoing hostilities, while also reflecting the geopolitical complexities surrounding the use of frozen assets in conflict scenarios.