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Frozen Russian assets begin funding Ukraine's defence
Summary
A first €1.5 billion transfer arrived as Ukraine's credit rating fell further, with Moscow threatening legal retaliation.
What did the first payment from frozen Russian assets signify for Ukraine's finances? On 26 July 2024, the European Union sent its first transfer of €1.5 billion (US$1.63 billion) in proceeds from frozen Russian assets to Ukraine, to support military and infrastructure needs.
The Kremlin denounced the transfer as "illegal" under international law and pledged legal retaliation. That put the money at the centre of a dispute between Brussels and Moscow over the use of immobilised Russian funds.
A tightening financial picture
The day before, on 25 July 2024, Fitch Ratings downgraded Ukraine's credit rating from "CC" to "C". The agency cited the country's need to restructure US$20 billion in international bonds held by foreign investors, a step that raised the risk of default.
Read together, the two reports show Kyiv facing pressure on two fronts: a rating agency warning of default risk on its external debt, and a new channel of funding drawn from Russian assets rather than from Ukraine's own borrowing.
What followed from the reports
The transfer was framed by the EU as support for military and infrastructure needs, while Russia answered with a threat of legal action. Whether that retaliation would materialise was left open on 26 July 2024.
