Advisor to Ukrainian President: Frozen FX reserves lost to Russia forever

The relevant statement was made by Advisor to President of Ukraine on Economic Affairs Oleh Ustenko on 24 TV Channel, an Ukrinform correspondent reports.

According to Ustenko, half of Russia’s foreign exchange reserves, which were available before February 24, 2022 (about $325 billion out of $650 billion), are now frozen in the United States and EU countries.

“Ukraine is actively holding talks to make it a sort of the first tranche to our country’s restoration fund after the war. These funds have been lost to Russia forever,” Ustenko said.

In his words, about half of $300 billion remaining in Russia is gold.

“Here, Russia’s problem is that gold has already been sanctioned. Russia’s only opportunity to sell gold is to sell it within the country,” Ustenko noted.

According to the Advisor to the President of Ukraine, no country in the world will touch this gold, or they may be sanctioned too. There is no special demand for Russian gold in the domestic market. So, obviously, this asset does not exist either.

There is about $150 billion left in the account of the Central Bank of the Russian Federation. But, Russia is large, and these funds will not be enough for anything.

According to Ustenko, Russia’s only opportunity to use these funds is to try to pay off the debts they have and, perhaps, to buy critical imports, such as drugs.

“But, I am not sure they will do so. Russia will try to save these funds. The reduction in the foreign exchange reserves will mean a rapid fall in the Russian ruble rate. Russia will pretend they are all good,” Ustenko stressed.

Hence, according to Ustenko, Russia has some funds but cannot use them.

A reminder that, on February 24, 2022, Russian President Vladimir Putin initiated a full-scale invasion of Ukraine, starting a war. Russian troops are shelling and destroying the key infrastructure facilities, launching missile and air strikes on residential areas in Ukrainian cities and villages, torturing and murdering civilians.  

mk