Page 33 - Ukraine OUTLOOK 2025

military support and NOK12.5bn (€1.1bn) for humanitarian aid. The programme will be extended until 2030, and the total funding amount will be increased to at least NOK154.5bn. Also, the UN Refugee Agency is increasing funding for a project that will provide support to frontline areas to $40.6mn, allocating an additional $3.6mn to finance a cash assistance programme for specific segments of the population to prepare for winter.
Ukraine will not have to repay the $50bn G7 loan until it receives reparations from the Russian Federation. Ukrainian parliament members approved amendments to the Budget Code, which introduced a new concept in the budgetary sphere – conditional debt obligations. This establishes a special status for funds that Ukraine will receive from frozen Russian assets. "The 'non-refundable' loan of $50bn from the G7 countries and the EU is precisely such a conditional debt obligation because Ukraine will not repay this loan until it receives reparations from Russia," explained the head of the Verkhovna Rada budget committee, Roksolana Pidlasa. She added that this money will not be considered Ukraine's state debt. Without amendments to the Budget Code, Finance Minister Serhiy Marchenko could not sign an agreement to receive the $50bn from the G7. Now, the Ministry of Finance can sign the first agreement to receive funds from the $50bn package next week. In the future, transactions with contingent debt obligations within the framework of agreements with the EU, foreign states and international financial institutions (IFIs) will be handled by the Debt Agency, which is to be created.
In 2025, the Ukrainian government and the IMF expect to receive $13.7bn from the EU through the Ukraine Facility, $19.1bn under the ERA plan from the G7 and the EU, $3.1bn from the IBRD, $2.7bn from the IMF and $1bn from the UK.
On December 18, the Commission disbursed nearly €4.1bn to Ukraine under the first Pillar of the Ukraine Facility. This brings to €16.1bn the total EU funding disbursed to the Ukrainian government under the Facility so far as of the end of 2024.
Together, these contributions from external donors should furnish Ukraine's budget with $41bn. However, international donor commitments for 2026 barely reach $21bn. Starting from the second quarter of 2027, in the absence of new financial guarantees, Ukraine will face the problem of a colossal external financing deficit. Experts also emphasise that the existing commitments are not enough to provide powerful resistance in the war against Russia, as well as for further economic recovery.
• 5.5 Fixed income
Bond yields poised for gradual decline: The government bond market is also expected to see limited volatility in the near term. Analysts foresee little change in yields until the second quarter of 2025, after which a gradual adjustment is likely.
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