The Danish EU presidency, which currently chairs legislative negotiations in the bloc, asked that the Commission move ahead with the reparations loan after this week’s ministerial gathering in Brussels. That will at least give the chief advisers of EU leaders something to chew over when they meet on Friday to discuss the next summit, scheduled for mid-December, when the initiative will be back on the agenda.
However, many hurdles remain before Ukraine might actually begin receiving cash payouts. Further delays will likely force the EU to provide Kyiv with bridge loans until the funds arrive.
Here’s what to know about how long Kyiv has until it runs out of cash, and how Europe can fix it:
When does Ukraine run out of money?
Kyiv will start tightening its belt as of April if there’s no new cash injection from either the EU or the world’s lender of last resort, the International Monetary Fund. The contingency measures begin with front-loading money that is earmarked for next year, such as dividend payments from state-owned banks. After that, the government would look to sell debt to investors, who will demand a financial return for providing the IOU.
Once those options are exhausted, Kyiv would begin withholding funds for municipalities and for reconstruction tied to damage from Russian missiles and drone attacks. The last resort would be to postpone public salaries for civil servants, hospitals, pensioners and the military. That hasn’t happened so far in the ongoing conflict with Russia.
What’s the deal with the IMF?
The Washington-based IMF is preparing a new batch of loans worth about $8 billion to Ukraine. But disbursement is contingent on whether the EU agrees to use the Kremlin’s frozen cash to finance its far larger loan, which Ukraine wouldn’t have to repay unless Russia ends the war and pays war reparations — effectively a guarantee for the IMF.