Page 4 - Ukraine OUTLOOK 2024

Executive summary
Ukraine’s economy started to make a strong recovery in 2023 from the contraction that the invasion shock in 2022 caused. The country returned to growth in 2023. Inflation was falling faster than expected, allowing the National Bank of Ukraine (NBU) to put in a series of growth-boosting rate cuts, and the international foreign exchange reserves rose to an all-time high.
However, the outlook for 2024 looks less good, as Ukraine is entirely dependent on international aid that appears to be drying up after the summer’s much vaunted counter-offensive failed to make any progress at all. That has led some of Ukraine’s allies to ask “What next? How can we end this expensive war?” And that has fuelled the Ukraine fatigue that was already palpable in August, when the transfers to the budget began to fall dramatically.
Ukraine’s 2024 budget has a $41bn deficit that has to be entirely funded by international donors, but the Ministry of Finance (MinFin) has admitted that $29bn of those funds are unallocated. A $61bn package proposed by US President Joe Biden in December was not approved before Christmas and may not get through at all as funding Ukraine becomes a domestic campaign issue in the upcoming US presidential elections in November 2024.
In an ominous sign, Biden’s rhetoric changed in the December manoeuvring to get his $61bn bill through, changing from “We will stand with Ukraine for as long as it takes,” to “We will stand with Ukraine for as long as we can.” Ukrainian President Volodymyr Zelenskiy himself has pointed to the Israeli war with Hamas that broke out on October 7 as being a major distraction. While the White House said that it could supply both allies at the same time, Kyiv reported that the delivery of the key 155mm artillery shells fell by a third in October as shipments earmarked for Kyiv were diverted to Israel instead.
There are problems with EU support too, where a motion to start formal accession talks overcame a Hungarian veto after the European Commission (EC) released a €10bn payment of frozen funds to Budapest. However, Hungarian Prime Minister Viktor Orban vetoed a proposed four-year €50bn aid package during the same December summit, holding it in ransom for another €30bn EC payout to Budapest of more frozen money. The EU package will now not be decided until a vote slated for February.
In the meantime, US military experts said that US funding for Ukraine would dry up completely on December 30 and after that weapons supplies would also start to fall away, starting with the long-range missiles that have allowed the Armed Forces of Ukraine (AFU) to hold the Russian Black Sea fleet at bay. Then air defence ammunition will run out in the first two months of 2024, before Ukraine will run out of artillery shells in the summer. If these problems are not resolved before then there is a possibility of Ukraine being forced to capitulate in the summer of 2024.
However, given the amount of political capital invested into the Ukrainian cause, especially by the EC executive, led by European Commission President Ursula von der Leyen, it is likely that some sort of fudge will be found to keep the AFU in the field for another year.
4 UKRAINE OUTLOOK 2024 www.intellinews.com