Page 38 - Ukraine OUTLOOK 2024

Germany and Norway have delivered €1.2bn, €1bn and €662mn of military assistance respectively in the past three months as part of their previously committed multi-year schemes.
The EU is developing a €20bn contingency plan to finance Ukraine in 2024. An alternative scheme has emerged that involves member states providing guarantees to the EU budget, which would allow the European Commission to borrow up to €20bn on the capital markets for Kyiv next year. The FT's sources say this funding model has "gained traction as the most practical way of providing support" in case Hungary refuses to lift its veto at the summit scheduled for February 1. The new support option for Kyiv does not require guarantees from all 27 EU member states, provided that the main participants will be the countries with the highest credit ratings. This would allow the EU to bypass Hungary's veto, as it would not require unanimous support. Some countries, including Germany and the Netherlands, will need parliamentary approval for national guarantees. but this process is expected to be completed in time to provide aid to Ukraine by March. In addition, Ukraine has another backup financing plan: the EU might provide €18bn in cheap loans for several months and up to a year.
Ukraine is missing $29bn in funding commitments for 2024. In general there are four potential sources of financing to cover this gap: Russia, Ukraine, partner governments and the private sector.
During the war, given the risks, Ukraine’s Economic Policy Advisory Council (UEPAC) expects the private sector will not play a major role. Ukraine can and should make a contribution, but it cannot cover this gap, says the UEPAC.
UEPAC sees the use of Russian assets as a possibility, but it also depends on donors’ decisions, and for now, cannot be relied on.
This leaves donors as the critical source of finance for 2024, and likely for longer. And donors face other calls for their attention and resources.
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