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Minister of Finance of Ukraine and G7 financial leaders in Italy discuss Ukraine's budgetary needs and the use of frozen russian assets

Today, on May 25, Minister of Finance of Ukraine Sergii Marchenko joined the meeting of finance ministers, central bank governors of the G7 member states, the leadership of the IMF and the World bank, the European Commission  and the OECD in Stresa, Italy.

The key topics for discussion include maintaining a rhythmic financial support for Ukraine and the use of the frozen russian assets for the benefit of Ukraine. 

In his speech, Sergii Marchenko emphasized the crucial role of the G7 in keeping Ukraine's State Budget balanced. Japan has already provided more than USD 2.1 billion in financial assistance, Canada - about USD 1.5 billion, and the UK - USD 515 million. It is also expected that this year's budget support from the United States will reach USD 7.85 billion, and from the EU - EUR 16 billion. 

The Minister of Finance of Ukraine noted that the timely receiving of the necessary assistance from international partners, both military and financial, is a vital issue for the current and next year.

"Ukraine continues to demonstrate financial stability in the face of a full-scale war. In the first four months of 2024, tax and customs revenues of the State Budget of Ukraine increased by 36% compared to the same period in 2023. International financial assistance has reached USD 11.8 billion, supporting us in providing priority social and humanitarian expenditures. The Ministry of Finance is implementing the plan for the sale of domestic government bonds in full, with about USD 4.7 billion already raised. At the same time, russia is increasing pressure on the frontline and intensifying its energy terror in Ukraine. All this creates significant risks for economic recovery and increases Ukraine's budgetary needs. Coordination and quick decision-making by Ukraine and the G7 countries are essential in today's environment," said Sergii Marchenko. 

The need for external financing for 2024 is about USD 38 billion. In the first months of 2024, the Government had to frontload funds to provide the armed forces with the necessary equipment and ammunition, as external aid from partners was delayed. The planned USD 5 billion to cover military spending from the end of 2024 has already been redirected to the first and second quarters of 2024. Delays in external assistance and limited domestic resources causes a growing fiscal gap and negatively affects the ability to resist the enemy. 

 Russia's systematic shelling of Ukraine's energy system increases losses and slows down economic activity, and as a result, may lead to an increase in the State Budget deficit. In this context, Sergii Marchenko emphasized the urgent need to protect Ukraine's sky.

Searching for mechanisms to confiscate the frozen russian assets and direct them for Ukraine's needs has become an even more vital issue given the possible continuation of active hostilities next year and the significant financial needs. 

The Minister of Finance of Ukraine thanked the partners for their proposals in this regard and expressed his hope that a decision on the mechanisms for the use of russian assets and the profits they generate will be made as soon as possible. These funds should be used for the recovery of Ukraine, ensuring the key needs of the country, both in financing the budget and for use in other priority areas. 

"russia continues violating international law and systematically causing significant damages to Ukraine. In close cooperation with partners, we must take additional countermeasures in the form of transferring russian state assets as compensation for the damage caused to Ukrainians. The necessity of this was also recognized by the UN General Assembly. In 2022, a resolution was adopted calling for the russian federation to be brought to financial responsibility for the armed invasion of Ukraine," said Sergii Marchenko. 

Following the meeting, the finance ministers and central bank governors of the G7 member states issued a joint statement assuring further support for Ukraine.