Ukraine's central bank governor says defense is government's top priority

By Karin Strohecker and Andrea Shalal

WASHINGTON, April 24 (Reuters) - Missile and drone attacks on Kyiv overnight made clear that Ukraine's top priority needs to be defense, central bank governor Andriy Pyshnyi said on Thursday, underscoring his government's demand that some $300 billion in frozen Russian assets be turned over for the country's reconstruction.

The Russian attack overnight, the biggest on the Ukrainian capital this year, killed at least eight people, wounded more than 70 others and smashed buildings.

"When we are talking about priorities, it seems to me that last night was very clear evidence and good demonstration there is no priority other than defense," Pyshnyi said during a panel on the sidelines of the IMF and World Bank spring meetings in Washington.

Speaking at the same event, Ukraine's Finance Minister Serhii Marchenko said the government aimed to boost weapons production capacity beyond the current 30%.

"For us, security is the most critical element of our reconstruction, and everyone dreams about reconstruction."

Pyshnyi said Ukrainian officials raised the frozen Russian assets with U.S. Treasury officials in Washington on Wednesday and would do so again when they meet IMF officials on Friday.

Ukraine insists it must have access to the Russian assets immobilized by Group of Seven economies and others after Russia's 2022 invasion to cover its losses and fund reconstruction.

G7 nations agreed in October to provide some $50 billion in loans to Ukraine backed by the earnings from frozen Russian assets, but the fate of the assets themselves remains uncertain.

Some 260 billion euros ($295.52 billion) in Russian assets were frozen under sanctions imposed after the invasion.

The vast majority of those assets are held in Euroclear, a Belgium-based central securities depository, making the European Union a key player in any plan to use them.

"Is there a mechanism to get access to these assets, to turn them into the source to cover the losses and damages of Ukraine and to fuel its resilience? The answer is very simple, yes," Pyshnyi said.

The World Bank estimated in February that $524 billion was needed to rebuild Ukraine.

"During yesterday's meeting at the U.S. Treasury, our Ukrainian team tried to move this ... closer and closer to the center," he said.

Bob Saum, the World Bank's regional country director for Eastern Europe, said the development bank remained committed to supporting Ukraine, and planned to expand its current staff of 40 in Kyiv this summer.

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