G7 agrees $18.4 billion to keep Ukraine running, ready to do more


  • G7 provides $18.4 billion in funding for Ukraine

KOENIGSWINTER, Germany, May 19 (Reuters) – Group of Seven financial leaders agreed on Thursday to $18.4 billion to help Ukraine pay its bills in coming months and said they were ready to support kyiv throughout its war with Russia and to do more if necessary. , a draft release showed.

Finance ministers and central bank governors from the United States, Japan, Canada, Britain, Germany, France and Italy – the G7 – are in talks as the Ukraine, invaded by Russia on February 24, struggles to repel the attack and runs for More cash.

“In 2022, we have mobilized $18.4 billion in budget support, including $9.2 billion in recent commitments,” said the draft statement seen by Reuters.

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“We will continue to support Ukraine throughout this war and beyond and stand ready to do more if needed,” he said.

In the draft, the G7 on Wednesday welcomed the European Commission’s proposal to lend 9 billion euros to Ukraine and noted that the European Bank for Reconstruction and Development and the International Finance Corporation are planning support of a worth $3.4 billion. But it was unclear whether those funds were part of the $18.4 billion or separately.

Earlier on Thursday, German Finance Minister Christian Lindner said Germany would give Ukraine €1 billion and Japan pledged to double its aid to Ukraine to $600 million. to help meet their short-term needs. Read more

Ukraine estimates that it needs about $5 billion a month to keep civil servants’ salaries paid and the administration running despite the daily destruction wrought by Russia. Read more

The war has been a game-changer for Western powers, forcing them to rethink their decades-old relationship with Russia not only in terms of security, but also energy, food and global supply alliances, from microchips to rare earth.

More broadly, G7 policymakers are wrestling with the question of how to contain inflation and increase sanctions pressure on Russia without causing a recession.

More and more officials have been talking about the term “stagflation” – the dreaded 1970s combination of persistent price increases coupled with economic stagnation. Read more

“G7 central banks are closely monitoring the impact of price pressures on inflation expectations and will continue to appropriately calibrate the pace of monetary policy tightening in a data-dependent and clearly communicated manner, in ensuring that inflation expectations remain well anchored, while ensuring that the recovery is preserved and the negative spillovers between countries limited,” the draft states.

LONG-TERM REBUILDING

The European Commission on Wednesday proposed creating a fund of unspecified amounts of grants and loans for Ukraine, possibly jointly borrowed by the EU, to pay for post-war reconstruction.

The G7 said they were in favor, but avoided any details.

“We call on all partners to join us in supporting Ukraine’s long-term recovery and to ensure that the massive joint reconstruction effort is closely coordinated, including with Ukrainian authorities and international financial institutions. “, says the project.

Economists’ estimates of the cost of rebuilding Ukraine vary widely between 500 billion euros and 2,000 billion euros ($524 billion to 2,090 billion), depending on assumptions about the duration of the conflict and the scale of destruction.

With sums of such magnitude, the EU is considering not only a new common borrowing project, modeled on the pandemic recovery fund, but also to seize Russian assets now frozen in the EU, as sources of financing. .

Some countries like Germany, however, say the idea, while politically interesting, would rest on weak legal grounds and the draft G7 communiqué did not mention the issue.

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Additional reporting by Paul Carrel, Chirstian Kraemer, Leigh Thomas, Francesco Canepa, Leika Kihara, David Lawder and Jan Strupczewski; Editing by Matthew Lewis, Tomasz Janowski and Hugh Lawson

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