23 May 2024 16:36

Ukrainian Finance Ministry estimates 2025 foreign aid deficit at $12-15 billion

MOSCOW. May 23 (Interfax) - The strong likelihood of the active phase of the crisis continuing is resulting in the need to maintain significant external budget support, the deficit of which is estimated at $12-15 billion for next year, an issue that has to be resolved within the framework of the program with the International Monetary Fund, Finance Minister Sergei Marchenko said.

Ukrainian media reported that he made this statement during a Center for Economic Strategy podcast "What's wrong with the economy" on Gromadsky Radio.

"It is vital to have trust with partners and an understanding of common problems and common ways to solve them. These are, above all, partners from the IMF, G7 and other countries, especially the EU, who support us. From this point of view, we are already raising the issue of insufficient foreign aid declared and committed in the IMF program for 2025," he said.

Marchenko said Ukraine proposed to improve external aid indicators given that the baseline scenario for crisis to end in 2024 might not happen.

According to the updated extended financing program with the IMF, external financing amounted to $42.5 billion in 2023, this year it is projected at $38.1 billion and next year it is expected to decrease to $22.9 billion.

Marchenko said Ukraine was ready to take the path of reducing external support by $4 billion-$5 billion per year. "That is, we are ready to cover some of the deficit internally and reduce our external needs. But, on the other hand, we do not yet see the opportunity and certain commitments to enable us to say $32 billion [in external assistance in 2025] is guaranteed," he said.

He said that so far confirmed external funding for next year, subject to Ukraine fulfilling its obligations, includes the EU with its Ukraine Facility instrument and the IMF, and "quite likely" the UK.

Marchenko said a parallel track, as an interim solution to cover this gap, is financing from frozen Russian assets, in particular securitization of interest.

With regard to increasing internal revenues, he said "it'll come as no surprise to anyone, unfortunately, that the most effective policy measures are opportunities for working with the legal sector of the economy."

"We are actively thinking about how to mobilize additional internal resources," he said.