Loans that don’t need to be repaid: how Ukraine receives financial assistance from international partners
The Executive Director of the Centre for Economic Strategy, Hlib Vyshlinsky, stated that Ukraine will not lose EU support, at least in 2024.
“International partner support, especially financial aid, is absolutely essential for Ukraine. The most pressing concern, affecting both Ukraine’s economy and its population, is military aid, specifically Starlink and anti-aircraft capabilities. The Biden administration has created a $50 billion funding mechanism, part of which was transferred through the World Bank. This ensures the stability of funding. Even if political difficulties arise, the EU will support Ukraine. They understand that without Ukraine’s resilience, EU countries could be next. Therefore, Europeans will find money for Ukraine. At least in the perspective of this year, there is no need to worry about it,” said Vyshlinsky.
EU countries provide funds within a program that includes various sources of funding. Of the total amount of $50 billion, a large part comes from Europe ($20 billion) and the USA ($20 billion), while the remaining $10 billion is provided by Great Britain, Canada, and Japan.
“Formally, it’s structured as a loan that we are not repaying. The second part of European support is the ‘Ukraine Plan.’ This is a zero-interest loan for 35 years, with repayment starting after 10 years. There is a high probability that these loans may be written off. Even if they are not written off, the inflation currently observed in EU countries will significantly reduce the real value of these loans,” Vyshlinsky said.
In March, Ukraine received over a billion dollars in aid from the United Kingdom. These funds, while technically structured as a loan, are part of the $50 billion program financed by revenues from Russian assets.
“We will not be returning these funds. They were allocated in the budget as defense funding and will be directed towards the needs of the Defense Forces of Ukraine,” the economist stated.
Source: Espreso.
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