US plans to contribute $20b for Ukraine loan: Yellen

WASHINGTON:

The United States plans to contribute $20 billion to a G7 loan package for Ukraine and could soon announce new sanctions targeting Russian weapons procurement, Treasury Secretary Janet Yellen said Tuesday.

"We're very close to finalizing America's portion of this $50 billion loan package," she told a press conference, as world financial leaders gather in Washington for the annual meetings of the International Monetary Fund and World Bank.

G7 leaders are close to finalizing the plan, with policymakers set to meet later this week.

Yellen said leaders intend for the support to go to Ukraine by the end of the year, but there remains some more work in finalizing details.

"We expect to be able to contribute $20 billion to the $50 billion G7 package," she said.

"What I want to emphasize is that the source of financing for these loans -- this is not the American taxpayer," she added.

The loan will be backed by profits from the interest on Russian assets frozen after Moscow's invasion of Ukraine in February 2022.

Her comments come two weeks ahead of the US presidential election, in which Republican former president Donald Trump and Democratic Vice President Kamala Harris are neck-and-neck in the White House race.

Economic issues are top-of-mind for US voters, as households have been feeling the pinch from higher costs of living after the coronavirus pandemic.

A French finance ministry source told AFP: "We're still discussing the concrete, practical details of how to implement this scheme."

The official, who spoke on condition of anonymity, added that leaders are working towards a decision this week, with "a great deal of work at the technical level to reach an agreement."

Yellen noted Tuesday that although European Union sanctions need to be renewed every six months with a unanimous decision, she feels "good that this is a secure loan that will be serviced by Russian assets."

The United States is also set to announce new sanctions as early as next week targeting Russia over its war in Ukraine, Yellen said.

"We will unveil strong new sanctions targeting those facilitating the Kremlin's war machine, including intermediaries in third countries that are supplying Russia with critical inputs for its military," she said.

It has been more than 2.5 years since Russia's invasion of Ukraine, which prompted a series of US actions taking aim at Moscow's revenues and industrial complex.

Asked about US action in the Middle East, Yellen maintained that global oil markets should have "significant spare capacity" from Saudi Arabia and others, despite US restrictions targeting companies in Iran's oil and petrochemicals sectors.

The aim was to cut off funding of what it said was the country's "destabilizing activity" in the region.

Yellen is expected to appear as well at upcoming US-China working group meetings, a platform at which Washington has earlier raised concerns about Chinese industrial overcapacity.

Yellen said she has not heard policy announcements from Beijing that address excess capacity in the way she was hoping.

With IMF and World Bank annual meetings ongoing, Yellen also urged countries to do more for nations struggling with debt.