Yellen Says US Aims to Contribute $20 Billion for Ukraine Loan

Treasury Secretary Janet Yellen said Tuesday that the US is nearly ready to offer $20 billion toward a broad Group of Seven-led loan program to help Ukraine.

(Bloomberg) — Treasury Secretary Janet Yellen said Tuesday that the US is nearly ready to offer $20 billion toward a broad Group of Seven-led loan program to help Ukraine. 

G-7 nations are set to finalize as early as this week a $50 billion loan deal for Ukraine using the profits generated by frozen Russian central bank assets.

“We’re 99% there and it’s nailing down just a couple of relatively small things,” Yellen told reporters in Washington. “We’re very close and there’s nothing significant that needs to be still worked out.” She said the funding is intended to starting heading to Ukraine by the end of this year.

Along with the US contribution, the EU, which has approved a loan for up to €35 billion ($37.9 billion), would end up providing at least $20 billion, according to people familiar with the matter. 

The UK announced Monday it will put in £2.3 billion ($3 billion), with Japan and Canada expected to provide similar amounts, said the people, who spoke on condition of anonymity.

The G-7 aims for initial funds to reach Ukraine by the end of the year, with the bulk of the support being released next year in tranches, the people said. The aid will go toward meeting many of Ukraine’s military and economic needs. 

The loan plan is an effort to lock in guaranteed funding for Ukraine, as its allies brace for a possible election victory by President Donald Trump, who has been critical of sending US aid to Kyiv. It comes at a crucial time for the country, which has been struggling to hold its defensive lines amid a sustained push by Russia.

The people cautioned that the final details of contributions from each nation are still being ironed out and could change before an announcement is made.

The G-7 has collectively frozen about $280 billion of Russian central bank assets, with the vast majority of the funds in Europe, where they are expected to generate about $3 billion to $5 billion in profits a year. The loans would be repaid using the proceeds generated by the immobilized funds.

G-7 leaders reached a political agreement to provide Kyiv with the loans at a summit in June but have been locked in discussions to finalize a deal since. The US was seeking assurances from the EU that the assets would stay frozen in the longer term but Hungary has blocked changes to the EU’s sanctions regime, arguing that any decisions should wait until after the US election.

Hungarian Premier Viktor Orban is a strong supporter of Trump, who has said he will seek a quick deal with Russia, a position the Hungarian leader shares.

EU sanctions currently have to be renewed every six months and require the backing of all 27 member states to do so. The bloc is looking to extend that term to 36 months, a change that also needs the support of all member countries. US officials had suggested that the uncertainties surrounding the durability of EU sanctions could limit the size of the US contribution because of the risk that asset freezes get lifted long before the loans are paid back. 

Nevertheless, the US has now indicated that it will be able to make a significant pledge despite Budapest’s ongoing resistance.

Ukraine is eager to cement the financing plan. According to recent estimates by the Ukrainian government, in cooperation with the International Monetary Fund, the country’s financing needs for next year are expected to rise to $38 billion.

—With assistance from Kamil Kowalcze and Daniel Flatley.