© Reuters. FILE PHOTO: Ukraine’s President Volodymyr Zelenskiy attends the 54th annual meeting of the World Economic Forum in Davos, Switzerland, January 16, 2024. REUTERS/Denis Balibouse/File Photo
By Olena Harmash
KYIV (Reuters) -Ukraine hailed the EU’s approval of a major aid package on Thursday, with President Volodymyr Zelenskiy saying the backing was a “clear signal” both to Russia and the United States, where an assistance package has been held up in Congress.
His government said the deal was “critically important” for Ukraine’s stability ahead of this month’s two-year anniversary of Russia’s invasion.
“It is a clear signal to Moscow that Europe will stand firm and cannot be broken by any destructive waves devised by the Kremlin,” Zelenskiy said in his nightly video address.
“At the same time, it is a clear signal across the Atlantic, a signal that Europe is assuming its responsibilities. Security responsibilities. Strong responsibilities. We await decisions from America.”
First Deputy Prime Minister Yulia Svyrydenko told Reuters the government expected this year to receive 18 billion euros of the 50 billion euro ($54 billion), four-year EU package approved on Thursday. The first tranche of 4.5 billion euros is expected in March.
KEY FOR ECONOMIC GROWTH
“It is very important for us to maintain macroeconomic stability. It is a prerequisite for economic growth,” said Svyrydenko, who is also the economy minister.
“Partners’ aid is critically important to maintain this stability,” she said.
She said she expected the United States to follow the example of the EU.
Ukraine is reliant on financial support from its Western allies to finances its pensions, public sector wages and social and humanitarian spending with Western money.
Since the start of Russia’s invasion on Feb. 24, 2022, Kyiv has received about $73.6 billion in international financial aid, including $27.5 billion from the European Union.
The government also needs financial support from the United States to be able to cover its budget gap of about $37 billion this year, Svyrydenko said.
Uncertainty surrounds U.S. economic and military assistance for Kyiv as the U.S. Congress considers a request from President Joe Biden in October to approve an additional $61 billion.
The request, which also includes an allocation for Israel, has been stalled by Republicans’ insistence that it be tied to an unrelated shift in immigration policy.
The leader of the U.S. Senate said on Thursday that lawmakers would release within days the text of the legislation concerning U.S. security assistance and changes to immigration policy.
The bill is expected to pass the Senate, where Biden’s fellow Democrats have a slim majority, but its prospects in the Republican-controlled House of Representatives are much less certain.
The Ukrainian government expects to channel 39 billion euros out of the EU facility to cover its budget needs until 2027.
Svyrydenko said the EU package also included 8 billion euros to support the private sector via loans and grants to businesses in sectors with the most potential to boost economic growth.
“Our global objective is to become self-reliant and to be more confident of the future thanks to the resilience of the Ukrainian economy,” Svyrydenko said. “It is very important for us to develop private investments.”
The Ukrainian economy was devastated by the war at first. It shrank by about a third in 2022 as millions of people fled, cities and infrastructure were bombed, exports were disrupted and logistics and supply chains were ruined.
But businesses adapted and the economy has posted growth in 2023. The government expects gross domestic growth of about 4.6% this year after estimated growth of more than 5% last year.
Ukraine’s sovereign dollar bonds gained as much as 1 cent, with 2028 notes rising to 26.165 cents in the dollar, after the EU agreed on the package.
($1 = 0.9196 euros)
