Ukraine's finance minister says G7 support crucial for 'longer' war with Russia

WASHINGTON: A new international economic support package of US$115 billion gives Ukraine more confidence that it can prevail in battling Russia's invasion, amid growing recognition that the war could continue for longer than expected, Ukrainian Finance Minister Serhiy Marchenko said on Saturday (Apr 15).

Marchenko said Group of Seven (G7) finance ministers assured him during this week's International Monetary Fund (IMF) and World Bank meetings in Washington that they will support Ukraine for as long as needed, a shift from last year, when there was more pressure for Ukraine to agree to end the war.

He said that the fresh pledge of economic support - unlocked by a new four-year, US$15.6 billion IMF loan - was "tremendously" important for Ukraine, now in a second year of war after Russia's invasion on Feb 24, 2022.

"It helps us tremendously because it provides certainty that the IMF, together with G7 nations and supporters of Ukraine, will step in with money to cover our needs for four years," he said. "Compared with the last spring meetings, I'm feeling more confident that we can prevail in this war."

"Financial support is very necessary, as well as military support," he said, acknowledging growing acceptance that the military conflict could drag on.

"We should be ready that this war will last longer than we expected,” he said, noting that G7 partners were no longer pushing Ukraine to accept an end to war - as they had last year - but were now signalling their support for a longer conflict.

Marchenko underscored Ukraine's appreciation for United States economic and military support - about US$50 billion since the start of the war - and said that he was confident the US Congress would maintain bipartisan support for Ukraine, despite calls by some Republicans to scale back funding.

He also underscored the urgency to begin the reconstruction of energy infrastructure, roads, schools and housing, and that Ukraine needed to expand its capacity to absorb funding.

He said that one key step would be the development of war insurance, something already underway with the World Bank's Multilateral Investment Guarantee Agency (MIGA), to reassure global companies that participate in rebuilding the country - an undertaking that is expected to cost at least US$411 billion.

On the more US$20 billion of debt owed to overseas bondholders, the minister said that he is not yet in talks on whether to extend a two-year debt moratorium agreed last August.

"It is necessary to protect the reliability of the markets for future reconstruction," he said. "We will have time to find a solution."

Marchenko said there was also growing openness among donor countries to explore using Russia's frozen assets to pay for Ukraine's reconstruction than even six months ago.

"Our partners are thinking about the possibility of using Russian assets as a necessary tool to support Ukraine. They don't want to wait until the war ends, they want to find a solution faster," he said.

Marchenko said US Treasury officials had told him that the United States had a low amount of Russian assets, but the issue was of greater concern in Japan, Switzerland and European Union countries.

He said that G7 officials had told him they were broadly supportive of finding a way to utilise Russian assets, but still needed to find a legal solution to "a very complicated question".

US Treasury Secretary Janet Yellen on Saturday cautioned in an interview with CNN that there were legal constraints on using frozen Russian assets to pay for damage to Ukraine.

Marchenko also said that there were intense discussions about financial stability during the week's meetings after the collapse of two US banks and one Swiss bank last month, but he saw no signs of spillover on the Ukrainian banking sector.