Will Western aid plug Ukraine’s gaping budget deficit in 2024?

KYIV – European Union countries are due to meet on Thursday to try to agree on extending billions of euros in economic aid to Ukraine, as well as replenishing a military fund to arm Kyiv as it fights Russia’s almost two-year-old full-scale invasion.

Here are some facts and figures about the assistance Ukraine hopes to receive.

WHAT SUPPORT HAS UKRAINE RECEIVED AND HOW IS IT SPENT?

Ukraine relies heavily on economic assistance from the West and has received more than $73.6 billion in budgetary support since Russia’s February 2022 invasion, finance ministry data shows.

Ukraine spends nearly all of its domestic revenues on the defence sector and army, while budget sector overheads have been largely covered by Western aid. A single day of fighting costs about $136 million, Finance Minister Serhiy Marchenko has said.

This year the government will again need massive injections of financial support to disburse social payments, wages for budget workers, and pensions for millions of Ukrainians.

The government expects a budget deficit of about $43 billion in 2024 and plans to cover it with domestic borrowing and financial aid from its Western partners.

Finance ministry officials have previously said they expect to receive about $41 billion in international aid in 2024.

The government is worried by uncertainty over the financing. Ukraine has yet to receive aid this year from its biggest financial backers, the European Union and the United States.

WHAT IS EUROPE’S UKRAINE FACILITY?

Last summer, the European Commission announced a 50 billion euro ($54 billion) multi-year support package named the Ukraine Facility that would be delivered through 2027.

Kyiv officials have said they hope to receive 18 billion euros of budgetary support from the facility in 2024, financing that would be crucial for covering the budget gap this year.

But there is still no agreement on granting the aid among the bloc’s members, with Hungary voicing persistent opposition. Hungary vetoed the package in December and EU leaders will try again to reach agreement at their summit on Thursday.

WHAT ABOUT U.S. ASSISTANCE?

Ukraine is in talks with the U.S. government to receive economic assistance this year. Kyiv is seeking $8.5 billion in aid to help cover its budget deficit, senior lawmaker Yaroslav Zheleznyak said.

U.S. President Joe Biden’s administration asked Congress in October for nearly $106 billion to fund plans for Ukraine, Israel and U.S. border security, but Republicans who control the House with a slim majority rejected the package.

WHAT SUPPORT FROM INTERNATIONAL LENDERS?

Ukraine’s cooperation with the International Monetary Fund is important for its macroeconomic and financial stability. In 2023 the IMF approved a new 48-month lending programme worth some $15.6 billion.

Ukraine received about $4.5 billion last year. In 2024 the government hopes to receive another $5.4 billion but each tranche is linked to a series of reform targets and economic indicators.

Ukraine also expects about $1.5 billion from other international financial institutions, including the World Bank.

ANY OTHER AID?

Ukraine has agreed on financial support packages from Britain and Japan for 2024. It is also in talks with the governments of Canada, Norway, South Korea and others to secure other funds. REUTERS

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