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Olga Zykova: Ukraine needs further support to effectively resist russian armed aggression

On January 31, during a business trip to Luxembourg, Deputy Minister of Finance of Ukraine Olga Zykova and Government Commissioner for Public Debt Management Yuriy Butsa took part in panel discussions at the international business forum dedicated to the Rapid Recovery of Ukraine.

During the panel discussions, representatives of the Ministry of Finance and international partners discussed the current financial and economic situation in Ukraine, support of international donors and financial organizations. Special attention was paid to the urgent needs of rapid recovery, the issue of increasing international funding for Ukraine and the prospects of post-war reconstruction.

Olga Zykova emphasized that despite the devastating economic consequences of the russian war in Ukraine (in particular, reduction of economy by 30.3%, inflation of 26.6% in annual terms, the state budget deficit of USD 5 billion per month), the Government managed to keep the situation under control and ensure macro-financial stability of the state in 2022.

“Despite the unprecedentedly difficult conditions of the war and constant uncertainty, the Ukrainian Government coped well with the financial and economic challenges. This became possible, not least, thanks to the incredible efforts of Ukraine's international partners, to whom we are extremely grateful,” said the Deputy Minister of Finance of Ukraine.

According to her, the Government carried out systematic work to reduce the budget deficit by increasing tax and customs revenues, as well as optimizing a number of areas of budget expenditures. However, in 2023, the need for international financing remains significant and amounts to about USD 3 billion every month. The predictability, regularity and rhythm of the inflow of funds are extremely important conditions, as this will provide an opportunity to avoid monetary financing, which has a negative impact on the economy. Obtaining the specified funding will allow us to effectively resist the full-scale armed aggression of the russian federation in the future.

"Currently, the Ukrainian Government has confirmation of financing from the EU and the US of about USD 30 billion for 2023. However, there is still a need for another USD 10 billion. And here we count on help from other countries and international financial organizations, in particular the IMF," said Olga Zykova.

Representatives of the Ministry of Finance emphasized Ukraine's commitment to efficiently and transparently use donor funds.

"We continue active cooperation with partner countries and international organizations - the World Bank, IMF, EBRD and EIB. Ukraine is interested in ensuring effective, accountable and transparent use of funding, including from donors. Active work is currently underway to create appropriate mechanisms," Olga Zykova said during the panel discussion.

The Deputy Minister of Finance also outlined the key priorities of the state that require donor funding for rapid recovery - these are energy, demining, restoration of residential buildings and critical infrastructure, as well as economic support.

Investments of partners and donors will be aimed primarily at creating basic and safe conditions for life and business. Olga Zykova emphasized the need to restore critical infrastructure, including electricity grids, roads, railways, gas supply, water supply, recovery of schools and hospitals, as well as providing temporary housing to those who lost it.

The current state of the national debt of Ukraine was also discussed during the forum.

“As of the end of 2022 Ukraine’s state Debt also noted that the most important part of Ukraine’s reconstruction plan is creating the favorable environment for private investments. What we need to do is to give people and businesses opportunities to build what they want to projected GDP amounted to 78.6%, which corresponds to the level of the other EM countries that don’t have war. Ukraine’s public debt consists of 40% of the local debt, 40% of the concessional debt from official partners and IFIs, and only 20% of the Eurobonds. We keep looking for solutions for improving Ukraine’s debt sustainability and mitigating the key risks in public debt management,” said Yuriy Butsa.

Government Commissioner for Public Debt Management also noted that the most important part of Ukraine’s reconstruction plan is creating a favorable environment for private investments, giving people and businesses opportunities to build what they want.