G7 Framework for Ukraine ERA Loans

The document presents the main features of the “ERA Loan initiative” for Ukraine, with G7 members participating. The initiative provides total loans of 45 billion euros, equivalent to approximately 50 billion US dollars. It combines a common repayment source, allocation criteria, terms, and information-sharing arrangements while each lender establishes its own loan agreement and disbursement mechanism.

Each bilateral loan agreement between a lender and Ukraine will enter into force by June 30, 2025, and the loans will be fully disbursed to Ukraine between December 1, 2024, and December 31, 2027. If policy conditions are established, their content and the transparency and accountability requirements will be set consistently, taking existing arrangements such as the Ukraine Facility and IMF programs into account.

The framework’s central concept is to provide funding to Ukraine upfront, repay principal and interest through extraordinary profits generated by Russia’s immobilized sovereign assets and other sources, and coordinate the operations of G7 lenders under common principles.

For Ukraine, the framework establishes channels for receiving medium- and long-term funding from multiple G7 lenders. Each lender’s policy conditions and transparency requirements will be operated with consideration for consistency with existing Ukraine support and IMF programs. Adjusting disbursements in light of Ukraine’s funding needs and capacity to absorb funds is also an operational premise.

For G7 countries and institutions, allocating repayment resources in proportion to committed principal establishes a common allocation criterion unaffected by the actual timing or amount of disbursements. If profits exceed the repayment amount due in a period, the excess may be used for early repayment of principal or held as a buffer for future payments, preserving options for repayment management.

When extraordinary profits alone are insufficient to repay principal and interest in full, the framework allows lenders to use all available means while avoiding adverse effects on Ukraine. Conversely, even if peace is achieved and Russia pays compensation for the damage, any balance not covered by extraordinary profits will be addressed through G7 consultations on treating claims among lenders equally, with Ukraine repaying each lender.

The loan contributions are 18.115 billion euros from the European Union, 20 billion US dollars from the United States, 5 billion Canadian dollars from Canada, 471.9 billion yen from Japan, and 2.258 billion pounds from the United Kingdom. Each lender will disburse and repay the loan in its national legal tender. However, ULCM will make payments to lenders in euros, while each lender will be responsible for currency conversion and reporting.

The principal and interest of each loan will be repaid using at least 95% of the extraordinary profits generated by Russia’s immobilized sovereign assets held by the European Union and, where applicable, other G7 countries, together with other voluntary contributions. Extraordinary profits will be allocated to lenders twice per year in proportion to the committed principal of each loan and will not depend on the actual amount or timing of disbursements to Ukraine.

A lender receiving an allocation of extraordinary profits must, within 12 months after receiving each allocation and until 100% of the loan proceeds has been transferred to Ukraine, cumulatively transfer to Ukraine an amount at least equal to the cumulative extraordinary profits it has received up to that point. If allocated profits exceed the principal and interest payment due for the period, the excess will be used for early repayment of principal or held as a buffer for future payments, with the interest on that buffer used for loan repayment.

Each loan will have a maturity of at least 30 years. The interest rate may be fixed or variable and may not exceed the greater of the lender’s funding cost or the interest rate reasonably necessary to offset the lender’s budgetary cost.

Each lender will determine its own means of providing funds and the governance of those means. However, each means and governance arrangement will remain consistent and coordinated, taking into account Ukraine’s funding needs, capacity to absorb funds, and common considerations concerning loan terms. Russia’s sovereign assets will remain immobilized under each country’s legal system and applicable law until Russia ends its war of aggression and pays Ukraine for the damage caused by that war.

If extraordinary profits are insufficient to cover interest or scheduled principal repayments, lenders may capitalize unpaid interest into the outstanding principal balance or continue accruing interest until they receive an amount sufficient for repayment. Capitalization of interest will not alter the share of extraordinary profits allocated to that lender or the treatment of repayment after peace is achieved. If additional voluntary contributions are made to ULCM, G7 lenders will receive full and timely disclosure of all contribution commitments and their duration. Throughout the implementation period, G7 members will exchange relevant draft loan and operational documents and consult on and resolve inconsistencies between the arrangements.