The EU will not finance a $50B loan to Ukraine, so who will provide the funds, and what are the risks?

Italian Prime Minister Giorgia Meloni explained that EU countries are not planning to participate directly in the $50B loan that the G7 plans to provide to Ukraine through the proceeds from frozen Russian assets.

According to her, the loan will be provided by the US, Canada, Britain, and Japan, though the latter may have some constitutional restraints on their participation. European countries will not contribute to this loan because all assets are frozen in Europe, and it has already contributed by establishing the guarantee mechanism for loan repayment.

Meloni also noted that Russian assets will not be unfrozen except through peace negotiations, including the Russian Federation’s obligations to compensate Ukraine for damages.

At the same time, according to the Head of the Macroeconomic Research Department at ICU, Vitaliy Vavryshchuk, the G7’s $50B loan carries the risk of a reduction in funding from partners on a bilateral basis. However, it guarantees there will be no budget crisis in Ukraine in the coming years.