Ukraine has warned that Kyiv is “squeezed by uncertainty” over cash flows and has demanded that the EU provide a steady and predictable flow of financial support to keep the government functioning.
The petition confirms that the European Commission agrees on a strategy for greater clarity on economic aid to Ukraine next year despite urgent calls to clarify its approach from both Kyiv and Washington. It’s done when you’re struggling to do it.
“Of course we need a more structured and more predictable process. [from the EU]said Deputy Prime Minister for European Integration Olha Stefanishina. “We are waiting for the commission.”
“It depends on whether teachers get paid, whether medical staff, social workers and pensioners get paid, and whether government can do its job.” I hope you don’t get crushed by
Kyiv expects $38 billion in budget support from international partners in 2023, or about $3.5 billion per month.
Stefanishyna applauded the US decision to provide monthly budget support to Kyiv and urged the EU to do the same. So far, however, there is little clarity on how the more predictable funding plan will work, say diplomats and officials at the block.
“There are many questions about how the EU will handle funding to Ukraine, and few have been resolved,” said an EU diplomat. “How much do you need? Should the financing be all loans or a combination of loans and grants? Where will the money come from if the state budget is limited? how to escape [macro financial assistance] Establish a more stable and predictable funding source?”
Since Russia launched its full-scale invasion in February, EU aid to Ukraine has been repeatedly delayed as member states fight over the terms of the loan. The EU extended her €1.2 billion emergency MFA loan in the spring and he announced plans to lend another €9 billion.
However, Block has only transferred €1 billion of its new funding round. From now until the end of the year, he has agreed to pay €5 billion in three installments, with his remaining €3 billion undetermined. Washington has already provided Kyiv with his $8.5 billion economic aid.
Kyiv, outraged by the EU’s slow pace of spending, has been forced to risk igniting hyperinflation and ask the central bank to print money for the budget.
“Whenever we don’t have that kind of predictability, we treat whatever we receive as a surprise or a gift,” added Stefanishyna.
Finance Minister Sergiy Marchenko said Ukraine’s short-term budget needs for 2022 will be met as long as the EU pays the full EUR 9 billion. But plans for next year were “vague,” he added.
The US informally pressured EU officials to step up their fundraising efforts at a UN conference last month. “Predictability is very important to us, which is why we welcome the US to encourage her EU colleagues to commit to next year,” Marchenko said.
Negotiations between Kyiv and the IMF have intensified in recent weeks, with President Volodymyr Zelenskyy suing an IMF aid package worth at least $20 billion. The difficulty is in setting structural adjustment targets given the great uncertainty surrounding war.
Kyiv says it will need another $17 billion next year to finance emergency reconstruction of homes and schools.
The finance minister said the priority was to get budget support for the first three months of next year, before negotiations on recovery funds could begin. Germany has scheduled a conference on reconstruction on October 25th.
Some diplomats worry that if the European Commission becomes the center of the general fundraising effort, it will deter non-EU donors. A Ukrainian official says he wants the EU to appoint a person or office to act as an interlocutor to aid reconstruction.
Dmitro Natarka, head of the Economic Affairs Committee of the Ukrainian parliament, said: “We do not understand who to talk to and who is financially responsible.
Without reconstruction aid, Ukraine’s economy will never recover, Natarka said. There is no war without economy. . . you are not trying to cure the patient. You are keeping him on life support. ”
A spokesperson for the Commission said: