Page 26 - Ukraine OUTLOOK 2023

Funding

Ukraine's Western allies will cover the majority of the 2023 budget
deficit. The EU has confirmed it will provide Ukraine with €18bn in
2023, distributed in tranches of €1.5bn per month, according to Prime
Minister of Ukraine Denys Shmyhal. At the same time, the US has
promised to send $9.8bn, bringing the total amount of international aid
to $28.7bn.

The US will allocate $44.9bn to Ukraine and its Nato allies in 2023.
The US Congress has received a 2023 state financing bill for $1.7
trillion, compared with the $1.5 trillion allocated in 2021, out of which
$44.9bn is to be allocated for Ukraine and the US-Nato allies, the
Washington Post writes. It is noted that the leaders of the Senate and
the House of Representatives plan to pass the bill and send it to US
President Joe Biden for signature by the end of the week. Democrats
and Republicans clashed over how much money should be allocated to
military and non-military programmes. At the same time, next year the
US will adopt a record defence budget, which will amount to $858bn
and exceed last year's, which reached $740bn.

Ukraine received $27.2bn in financial aid by December after Russia
launched a special military operation in late February. Deputy
Finance Minister Roman Ermolichev said that next year the amount of
assistance will increase up to about $38bn to cover the budget deficit.

The NBU has expressed its expectations for the new IMF credit
programme. The National Bank anticipates a full-fledged programme
of expanded IMF financing in 2023. This may happen following the first
results from the monitoring programme, the approval of which is
expected at the end of the current year, said Deputy Chairman of the
NBU Serhii Nikolaychuk.

In November, Ukrainian authorities and the IMF reached a staff-level
agreement on economic policies for a Programme Monitoring with
Board Involvement (PMB) that will start the process of a full
IMF-supported programme.

“The PMB will help provide an anchor for macroeconomic policies and
catalyse donor support. Strong policy implementation would help pave
the way towards a full-fledged IMF-supported programme,” head of the
IMF mission to Ukraine Gavin Gray stated.

The IMF programme will ease the concerns of Finance Minister Serhiy
Marchenko, who warned in the autumn that the first quarter of next year
will pose the biggest challenge for Ukraine in terms of covering the
budget deficit. He noted that despite the funding from international
allies since the start of Russia’s full-scale invasion, more money has
been going out than coming in, threatening the exchange rate, macro

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