cross-posted from: https://scribe.disroot.org/post/7110362
Ukraine’s Finance Ministry and the World Bank signed a grant agreement on Thursday worth $690.8 million, funded by Japan and Canada through proceeds generated from frozen Russian assets under an Extraordinary Revenue Acceleration (ERA) Loan.
Signed in autumn 2024, the ERA Loan is the key macrofinancial assistance for Ukraine, helping Kyiv to sustain core state functions during wartime. The tranche represents Canada’s final contribution under the ERA instrument and Japan’s first disbursement.
The funding was secured under the “Supporting Public Expenditures for Sustainable Public Administration in Ukraine” program, known as PEACE in Ukraine, a mechanism set up by the World Bank and Ukraine’s Ministry of Finance.
...
According to the finance ministry, the grant will be directed to Ukraine’s general budget fund and used to reimburse critical state expenditure, including pension payments and social assistance programs.
These include housing and utility subsidies, which have grown in importance as millions of Ukrainians face reduced incomes amid the war and repeated attacks on civilian infrastructure.
Of the total $690.8 million package, $544 million stems from the Japanese government, $146 million from Canada, and $800,000 from a multi-donor trust fund established under the PEACE in Ukraine program.
...
Following the latest disbursement, total funding mobilized through the PEACE in Ukraine program will reach $51.7 billion, the finance ministry reported.
...
The ERA Loan is a crucial component of Ukraine’s 2025 financial strategy, backed by profits generated from frozen Russian assets held in Europe.
The program redirects interest earnings from Russia’s immobilized assets toward Ukraine to compensate for the destruction caused by the war. The ERA Loan provides $50 billion in financial assistance that Ukraine will not have to repay.
This initiative was negotiated between Ukraine, the EU, the US, Canada, Japan, and the UK, with joint agreements signed in late 2024. These countries remain the ERA’s major stakeholders.
...
What the EU decided against it for now was to seizure Russian assets as far as I understand. Here - as well as many other funding processes for Ukraine - the grant for Ukraine is funded by the proceeds of Russian assets.
There are many Western officials and experts, however, who have been calling for the seizure. I hope this will be done soon. I must be clear that Russia will have to pay to the destruction it has caused.
Whats the distinction between the seizure versus the proceeds?
Proceeds refers to the interest rates the Russian assets earned by those assets (such as government bonds and other fixed income investments), while seizure of the assets would mean the assets (such as government bonds) would be transferred to Ukraine.
For now, Russian assets are frozen, meaning Russia can't access them, and only the proceeds are used for Ukraine's reconstruction and defence. But the assets are still Russia's, they just can't access it.
Okay, that makes sense. Thanks for explaining