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Ukraine will receive 400 million euros to support reforms. The allocation of funds was announced by the European Commissioner for Budget Johannes Gan. According to him, the EU may also soon continue to suspend all tariffs and trade protection measures for Ukrainian imports, informs FREEDOM.
The war unleashed by Russia in Ukraine led to an unprecedented increase in the budget deficit. A third of the state’s economy has disappeared, said Ukrainian Prime Minister Denys Shmyhal.
But despite the massive damage, the economy remains manageable and controlled. Some analysts are already calling it a “Ukrainian miracle.” Not the last role in supporting the economy was played by financial assistance from international partners: primarily the United States and the European Union.
“We promised that there would be stable, predictable, ongoing financial support, and we kept our word. Two weeks ago, there was the first tranche of 18 billion in aid in 2023. All economic, humanitarian and military support of the EU to Ukraine since the beginning of the war has already reached 50 billion euros, and it is important for us to ensure the stability of the Ukrainian economy, energy security,” said the President of the European Commission Ursula von der Leyen.
EU leaders agreed on the allocation of 18 billion euros in December 2022. The first tranche, which Ukraine received on January 17, amounted to 3 billion euros.
This assistance is, in fact, a long-term preferential loan. He was issued on the condition that Ukraine will carry out reforms in the areas of the rule of law, public administration, the fight against fraud and corruption.
“For the first 10 years, we do not serve the body of debt, we do not pay anything. Interest, in principle, the rate on loans from the European Commission is formed as a weighted average for all countries that put in this box a conditional one, that is, this is the average rate that Germany, France, and Poland are now paying. That’s about the same level, up to 3%. In principle, under such conditions, this is exclusively concessional financing, and not commercial,” explained economist Grigory Kukuruza.
EU financial assistance helps maintain the country’s macroeconomic stability and prevents the hryvnia from depreciating significantly. The funds go to non-military needs of Ukraine, namely: the operation of critical infrastructure, the implementation of reforms and the social sphere.
“A significant part of the financial resource of the state directly or indirectly goes to the costs caused by the aggression of the neighboring state. State budget spending, of course, is mainly focused on defense and security. These are the highest priority needs. And for these needs we can use only the internal financial resource – that is, taxes, and we cannot spend the money that comes as support for partners. And for other needs, primarily social protection, both state budget revenues and donor funds can already be used, ”said Yulia Markuts, an analyst at the Center for Public Finance at the Kyiv School of Economics.
In 2023, Ukraine plans to attract $38 billion in international financial assistance. In addition to 18 billion from the EU, 10 more come from the United States. In addition, Kyiv is working with the International Monetary Fund (IMF) on a new structural assistance program for at least four years. It provides financial support in the amount of 16 to 20 billion dollars.
Recall that on February 3, the Ukraine-EU summit is being held in Kyiv. It is expected that the first assessment of Kyiv’s implementation of recommendations on joining the European Union may be announced there.
