Ukraine signs agreement with EU on use of frozen Russian assets proceeds
Photo: Minister of Finance Serhii Marchenko (Vitalii Nosach, RBC-Ukraine).
Minister of Finance of Ukraine Serhii Marchenko has signed an agreement to launch the Ukraine Loan Cooperation Mechanism (ULCM). It will create a legal framework for servicing and repayment of funds received by Ukraine, up to EUR 45 billion, according to the Ministry of Finance of Ukraine.
According to the Ministry, the mechanism will allow using the proceeds from Russia's frozen assets to cover the principal amount of the loan from partners under the G7 ERA initiative, as well as interest and any other costs associated with the loan.
Funds available through the ULCM can only be used to repay eligible loans provided to Ukraine by creditors under the G7 Extraordinary Revenue Acceleration Loans for Ukraine (ERA) initiative.
Loan for Ukraine
Earlier, Ukraine signed a Memorandum of Understanding and a Loan Agreement with the European Union to attract up to EUR 35 billion in macro-financial assistance (MFA).
The funds will be provided under the new Ukraine Loan Cooperation Mechanism (ULCM), which will provide a non-repayable form of macro-financial assistance.
In June, the leaders of the Group of Seven countries agreed to provide Kyiv with a $50 billion loan, partially financed by interest earned on Russian assets confiscated after the full-scale invasion of Ukraine in February 2022.
On December 3, the Verkhovna Rada amended the Budget Code to allow the G7 countries to receive $50 billion in loans against Russian assets. The law introduces a new concept - conditional debt obligations.
The document stipulates that the money will not be accounted for as a public debt of Ukraine. Ukraine will not repay this loan until it receives reparations from Russia.
