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international financial assistance in 2024. In the coming years, support from the international community will remain for Ukraine, but the amount may be lower. The Ukrainian government expects to receive $38B from all donors in 2024, including about $8B in grants from the US. However, domestic political tensions in the US have stalled Congressional approval of military and financial aid to Ukraine this year. "Our baseline scenario assumes full utilization of these funds this year. However, in the event of a shortfall in funding from the US, we believe that the consequences could be manageable, as the shortfall could be covered, in addition to other sources, by other donors and domestic borrowing," according to the US credit ratings agency. However, after 2024, there is a risk that external support for Ukraine may be less due to a busy election schedule in crucial donor countries and the possibility that some governments will consider the cost of providing continued support to Ukraine too high.
According to Financial Times, citing European officials. Frozen Russian sovereign assets in the EU could yield €15–20bn by 2027, with a portion likely to be regularly transferred to Kyiv. However, a portion of these funds may need to be reserved in Europe in anticipation of mass claims against Euroclear. Euroclear could lose €33bn located in Russia. Additionally, the Bank of Russia has the right to sue to seize Euroclear's funds in Hong Kong and Dubai. Lawsuits are also expected against Western banks that lose money in Russia due to its retaliatory measures. In the worst-case scenario, the European depository could be "completely depleted." If it runs out of capital, its license may be revoked, potentially leading to a global financial crisis given that Euroclear's total assets amount to €37 trillion. Hence, discussions in the EU are ongoing about how much profit can be sent to Kyiv and how much should be kept in Europe. There's also a need for an emergency aid mechanism for the depository if it faces financial difficulties.
Ukraine needs $9.5B in financing for priority recovery items; Ukraine’s partners are already working on mechanisms. The government has said that Ukraine needs $9.5B in external funding for priority recovery needs in 2024. To that end, the US State Department and the German Marshall Fund (GMF) have announced the creation of the Ukraine Cities Partnership (UCP), which will promote sustainable urban reconstruction in wartime conditions. The State Department and GMF will engage key stakeholders, technical experts, and financial partners in the UCP partnership effort, combining the energy and ingenuity of the private sector with governmental resources and assets. UCP efforts involve interaction with the government of Ukraine, the EU, multilateral development banks, and bilateral donors. The UCP initiative is designed for three years. At the same time, Greek Prime Minister Kyriakos Mitsotakis said that Greece's programs for Ukraine’s recovery will be concentrated in Odesa and directed primarily to the development of ports.
Due to delayed funding from its allies, Ukraine is seeking more resources and is looking for other domestic sources to finance urgent needs. All of Ukraine’s internal resources are directed to funding the army; the state has almost exhausted its possibilities for domestic revenue sources, said the head of the budget committee of the Ukrainian Parliament, Roksolana Pidlasa. She noted that Ukraine allocated almost half its $87B budget for 2024 to defense-related expenses, but its domestic revenues are only $46B. This means that the state needs to cover this deficit with the help of international partners and reduce non-military expenses. According to her, the budget deficit will increase further due to the mobilization of up to 500,000 recruits, as billions
51 UKRAINE Country Report April 2024 www.intellinews.com