The UK will provide Ukraine with a £2.26 billion ($2.94 billion) loan for its war effort against Russia based on cash generated by frozen Russian assets, according to Chancellor of the Exchequer Rachel Reeves.

The announcement comes ahead of a gathering of G7 finance ministers, to be held during meetings of the International Monetary Fund (IMF) and World Bank in Washington this week. 

“This new funding is in Britain’s national interest because the frontline of our defense – the defense of our democracy and shared values – is in the Ukrainian trenches,” Reeves stated on Monday.

In June, G7 countries agreed to a $50 billion loan for Ukraine, sourced from windfall profits from Russian funds. Initially, the US and the EU were expected to contribute $20 billion each, while the UK, Canada, and Japan would cover the remainder. Earlier this month, the EU ratified up to €35 billion ($38 billion) towards the G7 loan but may contribute less if the US provides the full $20 billion, according to Reuters.

Kiev’s Western sponsors are attempting to expedite negotiations over the loan to secure funding before the end of the year, amid concerns that Donald Trump could cut US aid to Ukraine if he returns to the White House, the Financial Times reported last week. The Republican presidential nominee has expressed skepticism about continued funding for Ukraine.

The loan will be repaid using profits from an estimated €300 billion in Russian assets frozen in Western financial institutions since the onset of the conflict in 2022, which Moscow has denounced as “theft.” Nearly €197 billion ($214 billion) of these funds are immobilized by Belgian clearinghouse Euroclear. The assets generated €3.4 billion in interest in the first half of 2024, as reported by the financial institution in July.

Despite pressure from the US, the IMF has thus far opposed the total confiscation of frozen Russian assets due to concerns it could undermine confidence in the Western financial system.

“What we’re not doing is confiscating these assets to fund this loan,” Reeves said on Monday. “We’re utilizing the extraordinary profits from the assets, and that’s how we’re confident we can do this within the appropriate legal frameworks.”

Moscow has repeatedly stressed that the “theft” of its sovereign assets undermines global trust in the entire Western financial system.