G7 countries pledge billions for Ukraine 'to get through this'

·3-min read

The Group of Seven agreed on Thursday to provide Ukraine with $18.4 billion (€17.6 billion) to pay its bills, funds that Ukraine's Prime Minister Denys Shmyhal said would speed up Kyiv's victory over Russia and which were just as important as "the weapons you provide".

"The message was: 'We stand behind Ukraine. We're going to pull together with the resources that they need to get through this'," US Treasury Secretary Janet Yellen told reporters at the G7 finance leaders' meeting at Königswinter, near Bonn in Germany.

Earlier on Thursday Shmyhal had written on Twitter, "Support of partners will speed up our victory... Despite Russia's efforts to destroy our economy, together we will win!"

Further pledges of weapons also came on Thursday, as US Secretary of State Antony Blinken said on Thursday he has authorised $100 million (€94.4 million) in additional US arms, equipment, and supplies for Ukraine.

G7 finance ministers on Thursday were trying to strike a new deal to keep Ukraine's budget afloat without losing sight of the global economic impact of Moscow's war.

Ministers and central bankers from the seven industrial powers -- the United States, Japan, Canada, France, Italy, the United Kingdom and Germany -- began tallying up the sums each country could disburse quickly.

The United States has confirmed that it will contribute $7.5 billion (€7 billion) from the massive $40 billion (€37.8 billion) aid package that the US Congress approved on Thursday.

Germany announced a contribution of €1 billion on Thursday.

Ukraine's urgent needs

The urgency is to provide cash to Ukraine for the current quarter as the conflict causes a collapse in cash inflows.

"We are in the process of collecting the various pledges of direct aid in order to continue to finance Ukraine's state functions with our means," explained German finance minister Christian Lindner, whose country is chairing the G7 this year.

Lindner said he hoped for "further progress" and additional commitments by the end of the meeting on Friday. He is aiming for a total sum of more than €10 billion.

To keep the country running, Kiev estimates it needs $5 billion (€4.7 billion) a month.

On Wednesday, the European Commission proposed "new macro-financial assistance" to Ukraine for this year of "up to €9 billion".

The proportion of loans and direct aid in this new support package is on the agenda of the G7 discussions.

The British government said on Thursday it would provide £50 million (€59 million) to guarantee electricity supplies to Ukrainians through the European Development Bank.

The Russian offensive has pushed up prices for energy, commodities and agricultural products across world markets.

Long term reconstruction

In the longer term, discussions on the reconstruction of Ukraine "have only just begun", Yellen stressed in Königswinter.

Some avenues of financing have been mentioned, such as using Russian assets frozen as part of the Western sanctions.

While Germany considers this hypothesis "politically conceivable", it stresses, as does France, that there are many legal obstacles. "We have to look carefully at the constraints that are imposed on us," the French finance ministry said.

"We have to respect the rule of law, even if we are dealing with Russian oligarchs," Lindner recently observed.

The war launched by Russia is expected to cause a massive contraction of the Ukrainian economy, estimated at 30% for this year by the European Bank for Reconstruction and Development (EBRD), and even 45% by the World Bank.