On 25 October, G7 leaders announced a new $50 billion loan to aid Ukraine, backed by profits from frozen sovereign Russian assets. In a communiqué published by world financial leaders in Washington DC at the October Annual Meetings of the IMF and the World Bank, the G7 confirmed their aim to start disbursing funds by the end of the year. According to the announcement, the loans will be repaid by the interest accumulated from immobilised Russian sovereign assets. To date, approximately €210 billion of assets from the Central Bank of Russia are being held in the EU and have been frozen under sanctions imposed over Moscow’s invasion of Ukraine in February 2022.

The disbursement was made possible under the Loan Cooperation Mechanism set up by the European Commission, which will allow Ukraine to request financial support in repaying the principal, interest and other costs of eligible loans. This aims to support Ukraine without burdening taxpayers in the G7 countries while also avoiding additional financial burden on Ukraine. The loans will be disbursed through multiple channels, including a Macro-Financial Assistance Loan from the EU, the IMF’s Multi-Donor Administered Account for Ukraine and a newly created Financial Intermediary Fund for Ukraine at the World Bank.

This move represents another attempt by Western international financial institutions’ shareholders to engineer creative ways to provide financial support to Ukraine. Previously, the IMF shareholders revised the Extended Fund Facility policy, providing for the first time in history upper credit tranche funding to a country in an active war. Such efforts, alongside the US’s announcement that it will write off $4.7 billion in loans to Ukraine come in contrast to the lack of support for debt stricken and conflict affected African countries, supporting long-lasting claims of hypocrisy in BWI’s lending decisions (see Inside Institutions, What are the main criticisms of the World Bank and the IMF?).