A Ukrainian serviceman stands on a tank. A halt to grain and steel exports in the conflict has deprived Kyiv of foreign currency earnings © Reuters
Financial Times: Allies sound alarm over plight of Ukraine’s public finances
Budget crisis now acute because of falling revenues and hold-ups in financial support from Kyiv’s partners
Ukraine’s international partners are sounding the alarm about the mounting pressure on Kyiv’s public finances as Russia’s invasion drives down tax revenue and its allies struggle to provide rapid financial support.
The US Treasury warned that emergency measures such as money-printing being used by Kyiv to prop up its public finances risked damaging its ability to provide critical public services over time, underscoring the need for allies to meet commitments to provide tens of billions of dollars of grants and cheap loans as quickly as possible.
EU finance ministers meeting in Brussels on Tuesday agreed on a fresh €1bn emergency loan for Ukraine, but they are struggling to land an agreement on a wider package for the country.
Valdis Dombrovskis, European Commission executive vice-president, said Ukraine was facing “massive short-term financing needs” and more work was needed to meet them. He urged EU member states to provide financial guarantees sufficient for the commission to advance a planned €9bn package to Kyiv.
Ukraine’s budget crisis has become acute because of a slump in tax revenues and customs duties since the invasion began almost five months ago together with higher war spending.
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Update: Ukraine wants $9 billion in monthly aid – FT (RT)
WNU Editor: One of my Ukrainian cousins is currently staying at my home in Montreal. She fled on the first day of the invasion to Poland, and stayed in France with friends on the hope that the war would end soon. She realized in May that it was not going to end soon, so she made the decision to come here.
I have mentioned her before, but for those who are new to the blog she was head of the Ukrainian business council a few years back, is a well known Ukrainian TV business personality, and she served in the Zelensky administration as an unpaid advisor on economic affairs up to the end of last year.
While doing this post this afternoon I asked her if this $9 billion per month request from Ukraine made sense. She said it only scratches what is needed, and it is going to get worse this winter. What is also not going to help is that Ukraine has a long history of corruption. Expect much of this aid (both humanitarian and military) to be siphoned off elsewhere.
Her advice on how to best prevent this is the EU getting an army of auditors together to enter Ukraine, and be ready to control where every cent goes. Unfortunately I do not see that happening. Auditors are not the type of people you expect will want to enter a war-zone.
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