January 10, 2023
U.S. Direct Financial Support for Ukraine
Background
to allow a rapid, standalone U.S.-World Bank agreement
In 2022, Congress enacted four emergency supplemental
not subject to the negotiated terms of the MDTF or PEACE
funding measures to address the crisis caused by Russia’s
Fund.
February 2022 invasion of Ukraine. These include the
March 2022 Ukraine Supplemental Appropriations Act,
The World Bank recently established a new “Ukraine
2022 (FY2022 USAA, P.L. 117-103, Div. N); the May
Relief, Recovery, Reconstruction and Reform Trust Fund
2022 Additional Ukraine Supplemental Appropriations Act,
(URTF)”; the United States has not funded that mechanism.
2022 (FY2022 AUSAA, P.L. 117-128); the September
2022 Ukraine Supplemental Appropriations Act, 2023
Congressional Oversight Measures
(FY2023 USAA, P.L. 117-180, Div. B); and the December
Funds appropriated for direct financial support to Ukraine
2022 Additional Ukraine Supplemental Appropriations Act,
are subject to a number of congressional oversight
2023 (FY2023 AUSAA, P.L. 117-328, Div. M). As of
measures, including those in the laws described above;
January 1, 2023, Congress has appropriated a total of $113
annual Department of State, Foreign Operations and
billion in FY2022 and FY2023 in response to Russia’s war
Related Programs (SFOPS) appropriations; and the Foreign
against Ukraine.
Assistance Act of 1961, as amended (P.L. 87-195).
(Separate oversight provisions address funding provided
To date, the U.S. Agency for International Development
pursuant to other laws, particularly military assistance.)
(USAID) has obligated $13 billion of the appropriated
funding for direct financial support for the Government of
Section 507 of the FY2022 AUSAA, for example, sets
Ukraine’s (GOU’s) central budget. USAID has not yet
certain requirements specifically for direct financial support
obligated FY2023 AUSAA funds for direct financial
to Ukraine. Section 507(b) requires that such support be
support. The agency has provided such support via three
“subject to a memorandum of understanding [MOU] that
World Bank mechanisms, rather than bilaterally.
describes how the funds proposed to be made available will
be used and includes appropriate safeguards for
Figure 1. U.S. Direct Financial Support for the GOU
transparency and accountability.” The section also requires
that such funds be “maintained in a separate, auditable
account and may not be comingled with any other funds.”
Sections 507(c) and 507(d) establish notification and
reporting requirements, including reports to Congress
detailing “results achieved” by the financial support every
90 days. The FY2023 USAA shortens the timeline for
preparing the required reports to 45 days and requires that
such reports also include the “metrics established to
measure such results.” That timeline holds today; Congress
received the most recent of such reports in December 2022.
Source: CRS, compiled from USAID and World Bank reporting.
World Bank Oversight Measures
World Bank Mechanisms
As noted, the United States channels direct U.S. financial
The Multi-Donor Trust Fund for Ukraine (MDTF), a
support to Ukraine through the World Bank. These funds
mechanism established in March 2022 that is meant to
are subject to the World Bank’s Standard Conditions for
reduce procedural steps and transaction costs associated
multi-donor trust funds; a bilateral U.S.-World Bank
with individual transfers by consolidating resources across
Administration Agreement detailing obligations between
donors for transfer to Ukraine.
the parties; and an agreement between Ukraine and the
World Bank detailing financing terms, scopes of activity,
The Public Expenditures for Administrative Capacity
requirements, and oversight standards.
Endurance (PEACE) Fund, a mechanism established in
June 2022 meant to support the GOU’s ability to continue
The MDTF was created under a broader project framework
compensating public employees. The initial scope included
that predates the renewed onset of hostilities. Before
government salaries (at the central and regional levels) and
withdrawal of funds, that framework requires that (1) the
school employees, and later expanded to pensions and other
World Bank affirm it is satisfied with the GOU’s
social services.
macroeconomic policy framework, and (2) that Ukraine
show progress toward carrying out reforms to land policy,
The “Transfer Out” MDTF, a mechanism specifically for
pensions, inland waterways, and anti-corruption programs,
direct U.S. support to Ukraine established in July 2022. It is
among others. The World Bank affirmed in November 2021
meant for the same purposes as the MDTF, but is intended
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U.S. Direct Financial Support for Ukraine
that Ukraine’s macroeconomic policy framework was
Inspector General Oversight. Congress appropriated
“adequate” for a loan to be issued and reaffirmed as much,
supplemental funding for the Department of State and
conditional on substantial additional external financing, in
USAID Offices of Inspector General (OIGs) and the
March 2022. The GOU must also retain records for all
Government Accountability Office (GAO) in the FY2022
expenditures until two years after an applicable project’s
USAA, FY2022 AUSAA, and FY2023 AUSAA. In the
closing date. World Bank representatives and, with World
James M. Inhofe National Defense Authorization Act for
Bank authorization, donors are entitled to visit sites
Fiscal Year 2023 (P.L. 117-263), Congress required a
financed under the project and to examine documents
report from the OIGs on their oversight framework with
related to grant obligations.
respect to U.S. assistance to Ukraine (§1247(b)). Some
Members, however, have raised concerns that the
Unlike the MDTF, PEACE Fund disbursements do not
supplemental funds for Ukraine have not had adequate
require a prior affirmation of macroeconomic policy
oversight. During consideration of the FY2022 AUSAA,
framework sustainability, nor are they tied to a set of
two Senators proposed amendments to the measure seeking
reform commitments. Funding is authorized for nonmilitary
to address this through the creation of a special inspector
government and school staff salaries through the general
general (S.Amdt. 5040, S.Amdt. 5041); Congress did not
budget of Ukraine, and the project maintains a results
adopt either amendment. In the FY2023 USAA, Congress
framework to track key targets for on-time payment of
included a provision that directed the Inspectors General to
government obligations—to include salaries, pensions, and
submit a report “detailing and assessing the mechanisms for
school operations. The PEACE agreement requires the
monitoring and safeguards” of the funds for direct financial
GOU to draft and execute a Project Operations Manual
support for Ukraine within 45 days of the funds being
acceptable to the World Bank, detailing administrative,
obligated. The FY2023 AUSAA included a provision that
financial, and operational policies for the agreement. The
directed the Inspectors General to submit a report within 90
agreement also requires Ukraine’s Deputy Minister of
days of enactment of the act on their oversight plans and
Finance, the designated project coordinator, to provide a
initial findings. Members may seek to determine whether
semiannual project report to the Bank.
OIG and GAO oversight of U.S. direct financial support for
Ukraine is sufficient and properly focused.
CRS has not identified public information on the Transfer
Out fund’s oversight structure. This product does not
Minimum Standards for U.S. Government-to-
profile the Standard Conditions, as CRS does not have
Government Assistance. Regular foreign operations
access to them.
appropriations require the Secretary of State to set
minimum fiscal transparency and budget management
Issues for Congress
requirements for all recipients of government-to-
government assistance. While Ukraine did not meet nor
As the war in Ukraine continues, the 118th Congress may
progress toward those minimum requirements in FY2022,
consider the following issues related to U.S. direct financial
the supplemental measures for Ukraine have not included
support for the GOU.
that requirement. As the conflict continues, Congress may
assess the priority given to financial transparency reforms
Congressional Oversight. Certain notifications and
in the midst of war. Congress may also assess how
reports—mandated in annual SFOPS legislation and the
Ukraine’s current management obligations compare with
four emergency supplemental measures—are required to be
requirements in U.S. loan guarantees provided to Ukraine in
submitted to only the Committees on Appropriations.
2014-2016, as well as U.S. budget support provided to other
Congressional interest in the war in Ukraine and U.S.
countries.
support for the GOU is broad, indicating engagement
among Members who do not sit on the Appropriations
Financing Structure. To date, U.S. direct financial support
Committees. Lawmakers may consider expanding
has been provided via World Bank mechanisms. The World
distribution of certain notifications and reports to enhance
Bank promotes its role as providing faster delivery, greater
oversight and understanding of funding for Ukraine among
implementation capacity, and pooling of funds from
Members not serving on those committees.
multiple donors. Congress mandated a U.S.-Ukraine MOU
to set transparency and accountability standards, and
Accountability Through the World Bank. The United
USAID is assisting with MOU aims. Congress may
States typically requires periodic reporting by the World
consider whether future funding should leverage World
Bank on multi-donor trust funds. The mechanisms
Bank mechanisms. Congress may evaluate U.S.-Ukraine
themselves, however, are established and monitored by the
bilateral financing as an alternative, which could reflect
World Bank, which may reduce U.S. capacity to shape
U.S. priorities more directly. Members may also evaluate
oversight. Congress may analyze the U.S.-Ukraine MOU
whether USAID is supporting MOU aims adequately.
for results achieved and evaluate the extent to which World
Bank targets comport with U.S. priorities for the GOU.
Members also may examine the extent to which U.S.
Emily M. McCabe, Analyst in Foreign Assistance and
representatives have participated in World Bank inspections
Foreign Policy
and audits to affirm appropriate use of funds. Given past
Nick M. Brown, Analyst Foreign Assistance
reports of corruption in Ukraine, Congress may also address
whether such financing could contribute, directly or
IF12305
indirectly, to incidents of waste, fraud, or abuse.
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U.S. Direct Financial Support for Ukraine
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
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https://crsreports.congress.gov | IF12305 · VERSION 1 · NEW