By David Lawder

WASHINGTON (Reuters) - The U.S. Treasury Department on Tuesday said it transferred the $20 billion U.S. portion of a $50 billion G7 loan for Ukraine to a World Bank intermediary fund for economic and financial aid to the war-torn country.

The Treasury Department said the disbursement makes good on its October commitment to match the European Union's commitment to provide $20 billion in aid backed by frozen Russian sovereign assets alongside smaller loans from Britain, Canada and Japan to help the Eastern European nation fight Russia's invasion.

The disbursement prior to President-elect Donald Trump's inauguration in January is aimed at protecting the funds from being clawed back by his administration. Trump has complained that the U.S. is providing too much aid to Ukraine and said he will end the war quickly, without specifying how.

The $50 billion in credit for 30 years will be serviced with the interest proceeds from some $300 billion in frozen Russian sovereign assets that have been immobilized since Russia invaded in February 2022. The G7 democracies have been discussing the plan for months and agreed on terms in October, prior to Trump's election.

President Joe Biden's administration initially sought to split the $20 billion loan in half, with $10 billion to be used for military aid and $10 billion for economic aid, but the military portion would have required approval by Congress, a task made more difficult by Republicans' sweeping election victory. With Tuesday's transfer, the full amount will be devoted to non-military purposes.

The Treasury said the funds were transferred to a new World Bank fund called the Facilitation of Resources to Invest in Strengthening Ukraine Financial Intermediary Fund (FORTIS Ukraine FIF). The global lender's board approved the creation of the fund in October with only one country, Russia, objecting.

The bank, whose charter prevents it from handling any military aid, has run a similar humanitarian and economic intermediary fund for Afghanistan.

U.S. Treasury Secretary Janet Yellen personally oversaw staff executing the wire transfer of the $20 billion to the World Bank fund, a department official said.

"These funds - paid for by the windfall proceeds earned from Russia's own immobilized assets - will provide Ukraine a critical infusion of support as it defends its country against an unprovoked war of aggression," Yellen said in a statement.

"The $50 billion collectively being provided by the G7 through this initiative will help ensure Ukraine has the resources it needs to sustain emergency services, hospitals, and other foundations of its brave resistance," she added.

U.S. dollar strength since Trump's Nov. 5 election victory has diminished the loan slightly in dollar terms. According to a G7 loan term sheet, the EU will provide $18.115 billion euros ($19.1 billion), Canada C$5 billion ($3.52 billion), Britain 2.258 billion pounds ($2.88 billion) and Japan 471.9 billion yen ($3.11 billion).