U.S. Treasury Secretary Janet Yellen on Ukraine Loan

By David Lawder

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen stated on Tuesday that G7 nations and European Union allies are "very close" to finalizing a $50 billion loan to Ukraine, backed by frozen Russian assets. The U.S. is expected to contribute approximately $20 billion.

During a news conference at the start of the International Monetary Fund and World Bank annual meetings, Yellen expressed confidence that the Russian sovereign assets, primarily held in Europe, will stay immobilized despite the EU needing to renew the freeze every six months.

"We're very close to finalizing America's portion of this $50 billion loan package," Yellen said when asked about the final negotiations over the loan, which aims to support Ukraine by year-end. She assured that the U.S. contribution would be repaid from earnings on Russian assets, not U.S. taxpayers.

Republican presidential candidate Donald Trump has vowed to "get out" of the Russia-Ukraine war, highlighting the urgency for G7 allies to finalize the loan before the Nov. 5 U.S. elections.

Earlier, EU lawmakers approved a plan to use frozen Russian assets to secure loans up to 35 billion euros ($38 billion). Yellen confirmed the U.S. is prepared to provide about $20 billion, stating, "nothing significant still needs to be worked out."

The U.S. had urged the EU for stronger guarantees that funds held primarily by Euroclear in Belgium would remain frozen long-term, even if hostilities in Ukraine cease. This would minimize the risk of U.S. taxpayer liability for the loan.

Yellen noted the U.S. would accept the EU's long-term asset freeze, especially with the ongoing conflict. "I think the assurances are already there. We asked for some mild strengthening, but feel good that this is a secure loan that will be serviced by Russian assets, not by American taxpayers," she stated.

In prepared remarks, Yellen announced that the U.S. would soon introduce strong new sanctions targeting Russia's military operations, particularly regarding intermediaries in third countries supplying critical inputs for military needs. While she declined to specify sanction targets, she mentioned existing authorities that could restrict banks' dollar access if they facilitate transactions for sanctioned entities.

Yellen concluded that further actions of this nature remain a priority for the U.S.