World Bank creates financial intermediary fund (FIF) to support Ukraine

11/10/2024 6:21

        The World Bank's
        executive board on Thursday approved the creation of a financial
        intermediary fund (FIF) to support Ukraine, with contributions
        expected from the United States, Canada and Japan, three sources
        familiar with the decision said.
        
        The only objection to the vote came from Russia, two of the
        sources familiar with the vote said.
        
        The fund, to be administered by the World Bank, will help
        fulfill a pledge by Group of Seven rich democracies to provide
        Ukraine with up to $50 billion in additional funding by the end
        of the year as it continues to battle Russia's invasion over two
        years ago, the sources said.
        
        Exact amounts to be contributed by the U.S., Japan and
        Canada are still being worked out, but will be backed by
        interest from frozen Russian sovereign assets, one of the
        sources said.
        
        The World Bank vote came a day after European Union envoys
        agreed to give Ukraine up to 35 billion euros ($38.3 billion) as
        part of the bloc's share in a larger planned loan from the G7
        nations, also backed by proceeds from the frozen Russian central
        bank assets, a statement from the Council of the EU said.
        
        Josh Lipsky, senior director of the Atlantic Council's
        GeoEconomics Center, said the two actions would allow G7
        countries to provide a significant funding boost to Ukraine, and
        make good on promises made at a G7 leaders summit in June.
        
        "This is a game-changing amount of money," he said, noting
        that Ukraine's spending on the war in 2023 was around $80
        billion to $90 billion. "It's real resources on the ground that
        can make a difference."
        
        The U.S. Treasury Department and White House declined to
        comment. No comment was immediately available from Japan or
        Canada.
        
        U.S. President Joe Biden spoke with German Chancellor Olaf
        Scholz about Ukraine and other topics on Thursday, after Biden
        postponed his trip to Germany in anticipation of Hurricane
        Milton, the White House said.
        
        World Bank President Ajay Banga told Reuters in May that he
        was "absolutely" open to the idea of managing a G7 loan fund for
        Ukraine backed by the earnings from frozen Russian sovereign
        assets - at least for nonmilitary purposes.
        
        The assets were frozen shortly after Russia launched a
        full-scale invasion of Ukraine in February 2022.
        
        Banga in May said the World Bank had ample experience in
        managing similar nonmilitary donor fund facilities, including
        one for Afghanistan. It could replicate that work for a Ukraine
        loan, he said.
        
        The new fund will allow non-European countries to
        participate in the broader loan.
        
        The G7 and the EU announced in June they would provide a $50
        billion loan to help Ukraine, serviced by profits generated by
        Russian assets immobilized in the West.
        
        More than two thirds of the assets, some 210 billion euros,
        are stuck in the 27-nation EU and of those, most are held by
        Belgium's depository Euroclear.