Ukraine calls for more clarity on aid from EU – POLITICO

Ukraine calls for more clarity on aid from EU – POLITICO

BERLIN — Ukraine’s message to Europe is: we need more money, and we need to know what’s coming and when.

So far, the EU’s pledged aid to Ukraine has been slow to reach Kyiv. Of €9 billion the EU pledged in May, only a third has been wired so far, with €3 billion more on its way. Privately, Germany also raised doubts on whether the country needs the final €3 billion tranche this year, according to multiple EU officials.

Those doubts and delays are something Ukraine can’t afford, Serhiy Marchenko, the country’s finance minister, told POLITICO in an interview Tuesday.

“Yes, we really need it,” he said, referring to the remaining €3 billion, and adding: “We believe that this money can be disbursed … If not, we have a very complicated first quarter.”

The EU is also starting discussions on how to support Ukraine next year, and the European Commission is set to present an €18 billion package of €1.5 billion per month for 2023. Together with an equal amount pledged by the United States, this would cover the country’s budgetary gap for 2023, projected at $37.9 billion by Ukraine. If it comes on time, that is.

“The question is timing and predictability. So if this money will come for the second half of the year, that means that in the first half of the year, we should find a way to finance that ourselves. I don’t see this [being] possible because it will create macroeconomic problems, disrupt our macroeconomic stability and create inflation pressure,” Marchenko said, speaking on the sidelines of a Ukraine reconstruction conference co-hosted by the German G7 presidency and the European Commission.

Since the war started, the Ukrainian government slashed its expenditures including freezing wages and pensions despite galloping inflation, which reached 24.6 percent in September, year on year. Even with that, it’s been running a budget gap of $5 billion per month since April. But to date Ukraine has received around $21 billion in foreign assistance, Marchenko said. To cover the rest it resorted to printing money and issuing debt, thus adding to inflation.

The war has caused a 35 percent drop in GDP this year, but the government expects it to grow by 4.6 percent next year, largely thanks to the rebound in economic activity, Marchenko said. In the first weeks of the war, around 75 percent of businesses stopped operations. That’s now down to 11 percent.

“Business is very resilient,” the minister added. “Every Ukrainian tries to resist this aggression.”

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