The G7 ERA initiative "Accelerating Extraordinary Revenues (ERA) for Ukraine," which allocates $50 billion from revenues generated by frozen Russian assets, fully addresses the state budget deficit for 2025. However, the government plans to retain part of these funds as a reserve for subsequent years, stated Ukrainian Prime Minister Denys Shmyhal in Kyiv on Thursday.
"The $50 billion that we will receive from the G7 countries and the European Union will serve as our reserve, our safety cushion for the next and even subsequent years. This is how we have planned it, and this is how we have agreed with the IMF and our partners," he said at the 10th Kyiv International Economic Forum (KIEF).
Shmyhal emphasized that thanks to this and other external financing, Ukraine will not resort to emission financing for the budget, and the country will have the necessary funds to finance the army and all priority budget expenditures.
"I want to point out that neither last year nor this year have we resorted to emissions, which has certainly preserved our macro-financial stability and provided a degree of predictability for both the exchange rate and inflation, benefiting each of you and every business. These are, of course, important elements of stability," the Prime Minister highlighted.
According to him, thanks to the program with the International Monetary Fund and the Ukraine Facility program with the EU, the government has a clear understanding of how it will address the budget deficit.
As reported, all countries have already announced the size of their contributions: the USA – $20 billion, the EU – EUR 18.115 billion (about $20 billion), Japan – 471.9 billion yen (about $3.1 billion), and the UK – GBP 2.26 billion (almost $3 billion at the current exchange rate).
The European Commission reminded that the establishment of the EU's special Ukraine Loan Cooperation Mechanism (ULCM) facilitated consensus among G7 members, into which extraordinary revenues from frozen Russian sovereign assets and other voluntary contributions from member states or third countries will flow. These resources will then be directed to repay the principal and interest on Ukraine's respective bilateral loan agreements with creditors.
The IMF, in its updated report following the fifth review of the Extended Fund Facility (EFF) program, indicated that upon the conclusion of the war by the end of 2025, Ukraine will need $33.1 billion from the mentioned $50 billion to support the budget: $19.1 billion next year, $9.2 billion in 2026, and $4.9 billion in 2027.
In a negative scenario where the war extends to mid-2026, Ukraine's budget will require the full $50 billion to cover the deficit.