Ukraine is staring down a massive hole in its state coffers, which only Western assistance can possibly plug.
With Russia continuing its all-out assault against the country, the government in Kyiv has devoted half of its 2024 expenses, worth €82 billion, to the defence sector. The wartime push, coupled with diminishing revenues from the battered economy, has left other budget priorities with little to no funding.
That has made the country intrinsically dependent on financial assistance from foreign donors, chiefly the European Union, the United States and other G7 partners.
Ukraine’s Finance Ministry estimates it will need $37.3 billion, or €34.45 billion, in external contributions throughout 2024, slightly down from the amount received in 2023. The $37.3 billion should cover the vast majority of the €39-billion deficit.
In a written statement to Euronews, the ministry said it expects Brussels to provide €12.5 billion this year as part of a four-year €50-billion special fund, known as the Ukraine Facility, while Washington has promised to wire $11.8 billion, or €10.9 billion, in financial assistance.
Kyiv is also counting on the International Monetary Fund (IMF) to approve over €5 billion in loans. The remainder of the €34.45 billion should be bankrolled by other Western allies, most notably the United Kingdom, Norway, Canada and Japan.
The injections of foreign aid are meant to sustain a wide range of essential services, including education, healthcare, social protection and old-age pensions, as well as assistance for internally displaced people and vulnerable citizens.
In other words, Ukraine channels most of the revenues it raises straight into the war effort while Western funds keep the state running.
But despite how indispensable these contributions have become, both the EU and the US find themselves in a political impasse and are, at present, unable to send Kyiv any cash.
In Washington, President Joe Biden’s proposal is stuck in an ideological fight in Congress, where Republicans demand unrelated concessions on migration and border control in exchange for green-lighting fresh money for Ukraine.
In Brussels, the €50-billion facility is being held up by Hungarian Prime Minister Viktor Orbán, who has caused frustration for his “transactional” requests and his inflexible attitude. Orbán’s veto will be at the top of the agenda during an extraordinary meeting of EU leaders later this week.
The simultaneous deadlock in Washington and Brussels has forced Kyiv to take stopgap measures to prevent essential services from collapsing. But the Finance Ministry warns this solution is temporary and cannot be extended sine die.
“These measures are limited in their effect, and all our partners share the sense of urgency and clearly understand the high necessity of further stable and predictable external funding for the sake of preserving macro-financial stability and sustaining the progress gained during 2023,” a spokesperson from the ministry told Euronews.
“The issue of the amount of funds from the EU is still under discussion. We are counting that EU side will approve the Ukraine Facility at the beginning of February.”
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