Ukraine’s Marchenko says G7 support crucial for ‘longer’ war with Russia

On Saturday, Ukrainian Finance Minister Serhiy Marchenko said a $115 billion international economic support package offers Ukraine more confidence it can defeat Russia’s invasion, despite growing understanding that the war may last longer than predicted.

Marchenko said Group of Seven (G7) finance ministers assured him during this week’s International Monetary Fund and World Bank meetings in Washington that they will help Ukraine for as long as needed, a change from last year, when Ukraine was under pressure to halt the war.

He called the extra economic help, unlocked by a four-year, $15.6 billion IMF loan, “tremendously” necessary for Ukraine, now in its second year of conflict after Russia invaded on Feb. 24, 2022.

“It helps 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. I’m more optimistic about winning this conflict than at the spring meetings.

“Financial support is very necessary, as well as military support,” he said, indicating growing understanding that the armed conflict could stretch on.

“We should be ready that this war will last longer than we expected,” he added, saying that G7 partners were no longer urging Ukraine to accept an end to war, as they had last year, but were now supporting a prolonged fight.

Marchenko said he was certain the U.S. Congress will continue bipartisan support for Ukraine despite Republican proposals to cut funds.

He stressed the need to rebuild energy infrastructure, roads, schools, and housing and increase Ukraine’s finance capability. He said war insurance, already being developed by the World Bank’s Multilateral Investment Guarantee Agency (MIGA), would reassure global corporations to join in reconstructing the country, expected to cost at least $411 billion.

The minister said he is not currently in talks to extend a two-year debt moratorium imposed in August on nearly $20 billion in overseas bondholder debt.

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

Marchenko said donor countries were also more inclined than six months ago to leveraging Russia’s frozen assets to rebuild Ukraine.

Our partners are considering utilizing Russian assets to back Ukraine. “They want a solution now, not after the war,” he remarked.

Marchenko said U.S. Treasury officials told him the US had few Russian assets, but Japan, Switzerland, and EU countries were more concerned. He added G7 leaders informed him they supported using Russian assets but needed a legal answer to “a very complicated question.”

On Saturday, U.S. Treasury Secretary Janet Yellen told CNN that utilizing frozen Russian assets to pay for Ukraine damage was illegal.

After two U.S. banks and one Swiss bank collapsed last month, Marchenko said there were strong debates about financial stability during the week’s sessions, but he noticed no spillover on the Ukrainian banking sector.