VIDEO
EXCLUSIVE
Assistance provided to support Ukraine’s economy since the beginning of the war in amounts and conditions.
What impact was the war imposed on the economy of Ukraine? Which countries and organizations supported the Ukrainian economy the most financially?
[Klitina] What impact has the war had on the economy of Ukraine? Which sectors are suffering the most? What measures does the Ministry plan to support the Ukrainian economy during the war? Does the Ministry expect to have agricultural export this year?
[Shemyakin] The World Trade Organization has confirmed that Russia’s war against Ukraine could reduce world economic growth by 1.3% this year. According to model calculations, global GDP will grow by just 3.1 – 3.7% in 2022.
The Ministry of Economy of Ukraine envisages a 16% fall in Ukraine’s GDP in the first quarter of this year. Ukraine’s annual economic decline could reach 40% due to the war.
The World Bank estimates a 45.1% drop in the Ukrainian economy due to war by the end of the year, although the magnitude of contraction will depend on the duration and intensity of the war.
More than half of the member companies of the European Business Association in Ukraine have either stopped or suspended their activities during the war (57%). Hostilities in Mariupol cut the size of the Ukrainian metal and steel industry. However, even if the most affected regions are entirely excluded from national economic activity, the sources of at least 70% of Ukraine’s GDP remain more or less intact.
Russia is blocking Ukrainian ports, which causes losses and blocks our export. The daily loss due to Ukrainian ports not functioning cause $40-50 million of losses to the state budget. The Ministry of Economy is working in cooperation with the Ministry of Infrastructure to create a logistics chain together with Poland and Germany to export Ukrainian products.
[Klitina] Could you describe the financial assistance being provided to support Ukraine’s economy since the war began, and in what amounts and conditions? Which countries and organizations have supported the Ukrainian economy the most financially?
[Shemyakin] The U.S. is currently the most prominent supporter of Ukraine, with EUR 7.6 billion since the outbreak of war (data as of Mar. 27, 2022).
President Joe Biden will ask Congress for $ 33 billion in support of Ukraine and new legal instruments to tighten sanctions and seize the assets of Russian oligarchs. [Editor’s note: Biden submitted a request for $33 billion worth of support for Ukraine on April 28]
All EU countries combined total EUR 2.9 billion, plus EUR 1.4 billion from EU institutions and EUR 2 billion from the European Investment Bank. The UK, Canada, and Japan have pledged a combined sum of EUR 1 billion in aid.
There is enormous need for funding, and this includes more than $20 billion in weapons, ammunition, and other military aid, $8.5 billion in direct economic aid to the government, and $3 billion in humanitarian and food aid.
Estonia is Ukraine’s biggest supporter in terms of aid (taking into account GDP), followed by Poland and Lithuania. The U.S. ranks 6th and Germany 12th, not including aid provided indirectly through the EU
[Klitina] Western allies have promised the Ukrainian authorities that they will assist in rebuilding the country, and President Zelensky has set up a special committee to rebuild Ukraine. What conditions apply to Ukraine to obtain the necessary funding, would this be grants or loans?
[Shemyakin] The European Commission informed diplomats that it is working on an EU instrument focused on Ukraine’s long-term needs rather than a multilateral instrument, as the European Union will pay most of the bills.
The fund will be modeled on the post-COVID-19 recovery fund and will finance investment and reforms in agreement with the Government of Ukraine. It is unclear how much will be provided through grants or loans.
As the war in Ukraine is still ongoing, Ukrainian authorities have not announced a possible amount for recovery. The figure will run into hundreds of billions of euros.
Returning from the IMF-World Bank Spring Meetings in Washington on April 18-24, Prime Minister Denis Shmygal said that the Ukrainian delegation had agreed on the sum of $4.8 billion in international aid.
The function of the IMF is to help create a macro-financial base for sustainable rebuilding. It consists of controlled, low inflation, creating a flexible exchange rate and having a policy of balancing the state budget. There will be many tasks in these areas after the war.
