“The dependence of Ukraine’s budget on external support cannot be overstated,” experts from the Center of Public Finance and Governance at the Kyiv School of Economics (KSE) wrote in response to questions from POLITICO.
According to the International Monetary Fund, Ukraine would need at least $37 billion in external support this year, most of which would come from the EU and the U.S. — but neither has made a final decision on the amount of aid, nor its conditions.
EU leaders are set to meet on February 1 to unlock their package, hoping to overcome — or circumvent — Hungary’s opposition.
In an interview with POLITICO last November, Ukraine’s Finance Minister Serhiy Marchenko urged European allies to unlock the vital cash lifeline, warning that his country’s economic collapse would be “very, very traumatic not only for Ukraine but for all of Europe.”
The country would be able to survive some delay in Western assistance by increasing taxation, selling government bonds, or obtaining piecemeal support from other international partners, wrote the experts from KSE.
However, they warned that those solutions would be temporary and in the longer term “there is no equivalent alternative to external financial assistance for fulfilling all budgetary obligations in Ukraine.”
