World Bank allocates tranche to Ukraine from frozen Russian assets
Photo: The World Bank is lending funds from Russia's frozen assets for the first time (cgdev.org)
The World Bank’s Board of Executive Directors has approved a financial aid package of $2.05 billion for Ukraine. This amount includes a portion of a previous loan from the US, provided using frozen Russian assets, according to the World Bank.
The approved Development Policy Operation for Ukraine aims to strengthen the country’s economic policies to ensure sustainable growth and enhance financial stability.
The new tranche includes a $1.05 billion loan through the Advancing Needed Credit Enhancement (ADVANCE), which will be provided through the Trust Fund for Ukraine, supported by Japan and the United Kingdom.
The operation is also co-financed by a $1 billion grant from the Facilitation of Resources to Invest in Strengthening Ukraine Financial Intermediary Fund (F.O.R.T.I.S. Ukraine FIF). The United States previously invested $20 billion in this fund, sourced from frozen Russian assets.
The operation consists of two main components.
The first component supports efforts to enhance Ukraine's growth potential. It focuses on policy measures to expand competitive opportunities in the railway transport sector and improve its management. This component also aims to optimize state participation in the banking sector, promote the production and use of renewable energy, increase credit flow to the agricultural sector, and enhance the qualifications of Ukrainian customs personnel.
The second component supports policy measures aimed at creating a growth-friendly macro-financial policy. These efforts include increasing domestic revenue, particularly through aligning excise duties on motor fuels with EU standards and conducting a comprehensive assessment of agricultural land. Additionally, the component seeks to improve procurement integrity by updating procurement legislation.
Bob Saum, World Bank Regional Country Director for Eastern Europe, noted that despite significant challenges, Ukraine’s government has stabilized the economy and remains focused on its development goals, including its aspirations to join the European Union.
"There have been significant achievements, and Ukraine continues to advance in its efforts to implement reforms to establish a vibrant market economy. The World Bank Group and our international partners will continue to support the Ukrainian people in realizing their EU aspirations," he said.
Loans to Ukraine
Following the June summit, G7 countries announced a $50 billion loan to Ukraine. The loan is expected to be repaid using proceeds from confiscated Russian assets.
The United States has pledged $20 billion as part of this initiative.
The European Union will provide a loan of up to €35 billion, which will be allocated to strengthening the energy system and enhancing air defense.
On December 16, President Volodymyr Zelenskyy stated that the $20 billion from the United States had already been deposited into the World Bank’s account.
