On October 27, the Center for Public Analytics “Vezha” held a discussion with economist Oleh Penzyin. Central topics were the prospects for an EU reparations loan to Ukraine, the current budget situation, and the impact of recent sanctions on Russian energy companies.
The EU summit discussed providing Ukraine with a reparations loan, needed to cover social expenditures and fund the war effort. The primary funding source considered is frozen Russian assets. However, per EU law, confiscation requires a court decision, a UN Security Council resolution, or a peace deal with Russia.
For 2024, the facility’s remaining loan under the Ukraine Facility—guaranteed by proceeds from frozen Russian assets—will be the core macro-financial aid, worth about $30 billion. However, approximately $15 billion is still needed to fully cover the budget. Financing for social and military spending is therefore uncertain.
Only about 60% of Ukraine’s budget is covered by domestic revenues, the rest relies on external borrowing. Given political instability in various EU member states, attracting financing via Russian assets has become key. The EU plans a reparations loan against these assets, but the final decision is expected no earlier than December.
New US sanctions are also a focus: most major Russian oil companies are now sanctioned, making up the bulk of Russian oil exports. This could trigger lower sales volumes, forced discounts for India and China, and complications in dollar settlements. Export infrastructure may become the next target for sanctions.
It was noted that China and the US use the Ukraine war issue as a bargaining chip in broader trade relations. Despite fiscal challenges, experts do not foresee a financial catastrophe for Ukraine in the short term but stress the importance of upcoming decisions on the EU reparations loan and international support.
