G7 pledges $18.4bn Ukraine support package

Group of Seven finance ministers say they will provide further funding for Ukraine, if required

G7 finance ministers and central bank governors meet in Koenigswinter, Germany. Bloomberg

Ukraine has been given $18.4 billion by the Group of Seven financial leaders to help Kyiv pay its bills in coming months, with the organisation saying it will support the country during its war with Russia and offer more support if needed.

Finance ministers and central bank governors from the US, Japan, Canada, UK, Germany, France and Italy — the G7 — are holding talks as Ukraine is running out of cash and struggling to fend off the Russian attack.

“In 2022, we have mobilised $18.4bn of budget support, including $9.2bn of recent commitments,” the draft communique seen by Reuters said.

“We will continue to stand by Ukraine throughout this war and beyond and are prepared to do more as needed,” it said.

In the draft, the G7 welcomed the European Commission's proposal on Wednesday to lend €9bn ($9.6bn) to Ukraine and noted that the European Bank for Reconstruction and Development and the International Financial Corporation planned support worth $3.4bn.

It was not clear if these funds were part of the $18.4bn or separate.

Earlier on Thursday, German Finance Minister Christian Lindner said his country would grant Ukraine €1bn ($1.1bn) and Japan pledged to double its aid for Ukraine to $600 million to help it cover its near-term needs.

Ukraine estimates it needs about $5bn a month to keep public employees' salaries paid and the administration working as Russia wreaks daily destruction.

The war has been a game-changer for western powers, forcing them to rethink decades-old relations with Russia not only in terms of security, but also in energy, food and global supply alliances in areas such as microchips and rare earths.

More broadly, the G7 policymakers are wrestling with the question of how to contain inflation and increase sanctions pressure on Russia without causing a recession.

More and more officials have brought up the term “stagflation” — the dreaded 1970s combination of persistent price increases coupled with economic stagnation.

A pro-Russian troop stands guard before the expected departure of Ukrainian soldiers, who surrendered at the besieged Azovstal steel mill in the course of conflict in Mariupol. Reuters

A Ukrainian soldier on reconnaissance in a recently retaken village on the outskirts of Kharkiv, east Ukraine. AP Photo

The destroyed part of the Ilyich Iron and Steel Works in Mariupol. AFP

US President Joe Biden, Swedish Prime Minister Magdalena Andersson and Finnish President Sauli Niinisto walk through the White House rose garden after discussing the war, as well as potential Nato membership, in Washington. AP

Ukrainian soldiers who surrendered at the besieged Azovstal steel plant in Mariupol are escorted by pro-Russian troops to Olenivka in the breakaway Donetsk region. Reuters

Ukrainian National Guard soldiers train in the woods of the Transcarpathian region. Reuters

A roof damaged during Russia's invasion of Ukraine is rebuilt in Moshchun village, near Kyiv. Reuters

Ukrainian children play war games at a "checkpoint" they set up in Stoyanka, near Kyiv. AFP

Russian soldier Vadim Shishimarin, centre, on trial for war crimes in the Solomyansky district court in Kyiv, Ukraine. AFP

A controlled detonation of explosive devices is conducted near Borodianka, Ukraine. Reuters

A Russian serviceman adjusts the Soviet flag on a statue in Leninsky Komsomol Square in Mariupol, Ukraine. EPA

A couple leave a metro station where they had been living after fleeing Russian shelling in Kharkiv, Ukraine. Getty Images

Ukrainian forces leave the Azovstal steel works plant in Mariupol. AFP

Russian militrary vehicles follow buses (not in picture) carrying Ukrainian troops being evacuated from the besieged Azovstal steel plant in Mariupol. EPA

Members of the self-proclaimed Donetsk People's Republic forces carry water bottles as the evacuation of Ukrainian soldiers is carried out in Mariupo. EPA

Ukrainian separatist troops and Russian soldiers, rear right, guard the buses with Ukrainian troops, in Mariupol. EPA

A member of the self-proclaimed Donetsk People's Republic forces escorts a Ukrainian fighter being evacuated from the steel plant. EPA

Russian militrary vehicles escort buses carrying Ukrainian troops from the Azovstal steel plant. EPA

A total of 265 Ukrainian militants, including 51 seriously wounded, laid down arms and surrendered to Russian forces, the Russian Ministry of Defence said on May 17. EPA

A Ukrainian soldier sits on a bus as troops are evacuated. EPA

Russian President Vladimir Putin on April 21 ordered his defence minister to not storm but blockade the plant where a number of Ukrainian fighters were holding out. EPA

Those in need of medical assistance were sent for treatment to a hospital in Novoazovsk, Russia said. EPA

Some of the Ukrainian troops evacuated from the steel plant. AP

A pro-Russian fighter stands guard next to a combat vehicle, before the evacuation of wounded Ukrainian soldiers from the besieged Azovstal steel mill,in Mariupol. Reuters

Pro-Russian troops wait before the evacuation of wounded Ukrainian soldiers from the Azovstal steel mill. Reuters

A wounded Ukrainian soldier evacuated from Mariupol is carried on a stretcher out of a bus, after arriving in Novoazovsk. Reuters

Buses carrying Ukrainian soldiers from the besieged Azovstal steel mill drive away under escort of the pro-Russian forces, in Mariupol. Reuters

Pro-Russian troops stand guard on a road in Mariupol, Ukraine. Reuters

Left to right, clockwise: Kazakhstan's President Kassym-Jomart Tokayev, Kyrgyzstan's President Sadyr Japarov, Russian President Vladimir Putin, Tajikistan's President Emomali Rakhmon, Armenian Prime Minister Nikol Pashinyan, Stanislav Zas, Secretary General of the Collective Security Treaty Organisation (CSTO), and Belarus's President Alexander Lukashenko hold a meeting of CSTO leaders at the Kremlin in Moscow. AFP

Finland's President Sauli Niinisto and US Senate Minority Leader Mitch McConnell answer questions from the media as Republican senators John Barrasso, Susan Collins and John Cornyn and US new ambassador to Finland Douglas Hickey listen, after a meeting at the president's official residence in Helsinki. Reuters

Sweden's Prime Minister Magdalena Andersson speaks to the media before the parliamentary debate on Swedish Nato membership, in Stockholm. Reuters

Firefighters work at a scene of a missile strike, as the Russian invasion of Ukraine continues, in Zatoka, Odesa region. Reuters

A closed McDonald's restaurant in Moscow. Reuters

A Ukrainian soldier walks past a wrecked Russian armoured personnel carrier, near Kutuzivka, north of Kharkiv. AP

A screengrab obtained from a video shows Ukrainian troops at the Ukraine-Russia border, in what was said to be the Kharkiv region. Reuters

Water gushes from a pump station after Ukrainian troops opened a dam to flood a residential area in Demydiv, to stop the advance of Russian forces towards the capital Kyiv. Reuters

Residental buildings damaged by shelling in Irpin, Kyiv region. EPA

Activists line up to form a peace sign in front of the building that houses the Bundestag, Germany's lower house of parliament, in Berlin. The event was organised by Greenpeace. AFP

Officials stand together for a photo at an informal meeting of Nato foreign ministers in Berlin, with the focus on the potential membership of Finland and Sweden. Getty Images

Finland's Prime Minister Sanna Marin (L) and President Sauli Niinisto hold a press conference at the Presidential Palace in Helsinki, where they announced the country's intentions to apply for Nato membership. AP

An Ukrainian girl with the national flag painted on her face attends a cultural event in support of the besieged country in a metro station in Dnipro, Ukraine. Reuters

Kalush Orchestra of Ukraine are named the winners of the 66th Eurovision Song Contest in Turin, Italy. Getty Images

Members of the Ukrainian military celebrate Kalush Orchestra winning the Eurovision Song Contest, at their position in the Kyiv region. Reuters

Refugees from Mariupol region arrive at a registration and humanitarian aid centre for internally displaced people in Zaporizhzhia, Ukraine. Reuters

A damaged street on the outskirts of Kharkiv. EPA

A damaged residential building on the outskirts of Kharkiv. EPA

Debris hangs from a regional government building in Mykolaiv, which was heavily damaged in a Russian attack. AP

Former students play table tennis in the playground of a destroyed school in Kharkiv. Reuters

“G7 central banks are closely monitoring the impact of price pressures on inflation expectations and will continue to appropriately calibrate the pace of monetary policy tightening in a data-dependent and clearly communicated manner, ensuring that inflation expectations remain well anchored, while being mindful to safeguard the recovery and limit negative cross-country spillovers,” the draft said.

The European Commission proposed on Wednesday to set up a fund of unspecified size of grants and loans for Ukraine, possibly jointly borrowed by the EU, to pay for postwar reconstruction.

The G7 said they were supportive, but avoided any detail.

“We call on all partners to join us in supporting Ukraine´s long-term recovery and to ensure the massive joint effort for reconstruction is closely co-ordinated, including with the Ukrainian authorities and international financial institutions,” the draft said.

Economists' estimates of the cost of rebuilding Ukraine vary widely between €500bn and €2 trillion ($524bn to $2.09tn), depending on the assumptions on the length of the conflict and the scope of the destruction.

With sums of such magnitude, the EU is considering not only a new joint borrowing project, modelled on the pandemic recovery fund, but also seizing now frozen Russian assets in the EU as sources of financing.

Some countries such as Germany, however, say that the idea, though politically interesting, would be on shaky legal grounds and the G7 draft communique did not mention the issue.