Ukraine package includes first funds from $20 billion US loan

19/12/2024 6:06

The World Bank said on

Wednesday its executive board approved $2.05 billion in

Development Policy Operation funding for Ukraine that includes

the first grant from a new $20 billion U.S. loan fund for Kyiv

that is backed by income from frozen Russian sovereign assets.



The new package aimed at boosting Ukraine's financial and

economic stability also includes World Bank financing of $1.05

billion that is enhanced with loan guarantees from a trust fund

supported by Japan and Britain, the World Bank said in a

statement.



The U.S. Treasury last week transferred the $20 billion in

loan funds to a new World Bank financial intermediary fund for

Ukraine, part of some $50 billion in financing for Ukraine

backed by the Russian assets that have been frozen since Russia

invaded Ukraine in February 2022.



The $1 billion grant from the fund marks the first resources

flowing to Ukraine from the G7 loan plan, which was agreed by G7

allies Japan, Canada, Britain, France, Germany, Italy and the

U.S. in October after months of negotiations.



U.S. President Joe Biden's administration had sought to lock

in the loan to Ukraine quickly before the January inauguration

of President-elect Donald Trump, who has complained about the

high cost of U.S. support for Ukraine. Trump has said he will

end the war quickly, without specifying how.



The new Development Policy Operation includes the funding to

Ukraine's Finance Ministry for budget support alongside policy

reforms to foster economic stability and facilitate a structural

shift toward sustainable growth.



These include measures to enhance competition in the railway

sector, promote renewable energy production, boost credit to

agriculture and streamline state involvement in the banking

sector, the World Bank said.



The bank's reform prescriptions also call for strengthening

domestic revenue generation, including aligning motor fuel tax

rates with those in the European Union and revaluing

agricultural land. It also aims to update government procurement

legislation.



Bob Saum, the World Bank's Eastern Europe country director,

said that despite major challenges from the war, Ukraine has

stabilized its economy and is working to build a "vibrant market

economy" as it aspires to join the EU.



"The World Bank Group and our international partners will

continue to support the Ukrainian people in realizing their EU

aspirations," Saum said.