30 Jun 2022 11:36

Ukraine receives $1.3-bln state budget financing grant from U.S., expecting next tranche in July

MOSCOW. June 30 (Interfax) - Ukraine has received a $1.3-billion grant from the United States as part of the state budget financing package, Ukrainian Prime Minister Denys Shmyhal said.

"Received a grant of $1.3 billion under the state budget financing package of $7.5 billion. We thank the World Bank and David Malpass [World Bank president] for quick decisions and funding mechanism," Ukrainian media outlets quoted Shmyhal as saying on social media on Wednesday evening.

According to Finance Minister Serhiy Marchenko, the next tranche is due in July. "We have just received the first grant of $1.3 billion from the United States. We are expecting to receive the next grant from the United States in July," Marchenko said on social media.

In his words, the money has been received through the World Bank's multi-donor fund as part of additional funding for the "Support to Comprehensive Reform of Public Administration in Ukraine" project.

Back on May 19, the U.S. Senate approved financial assistance to Ukraine and its allies in the amount of almost $40 billion.

Vladyslav Rashkovan, alternative executive director at the International Monetary Fund (IMF), said at the end of May that U.S. President Joe Biden had endorsed U.S. budget amendments to additionally allot $40 billion in connection with the events in Ukraine, including $7.5-billion grants to compensate for the Ukrainian budget deficit.

IMF European Department Director Alfred Kammer said in April that tax collection by the Ukrainian budget might more than halve because of the ongoing events, while 7 million internally displaced persons created a monthly state budget deficit of $5 billion in May-June, which required external support to the budget, predominantly with grants. He noted that the assessment of the monthly budget deficit of $5 billion in May-June was made by the Ukrainian authorities in tandem with the IMF.

As for the available instruments of support to Ukraine, Kammer mentioned the IMF administered account, the multi-donor trust fund of the World Bank, and the solidarity trust fund of the European Union.

According to the Ukrainian Finance Ministry, the Ukrainian budget had a deficit of UAH263.2 billion ($9 billion at the current rate) in January-May 2022. The deficit of the general budget fund (that accumulates taxes and duties and bears main expenses) stood at UAH270.8 billion, as against the expected deficit of UAH526 billion.

The State Treasury Service of Ukraine reported UAH101.3 billion received by the general budget fund in May 2022, as against UAH76.2 billion in April and UAH103.4 billion in March. The actual borrowings of the general budget fund amounted to UAH376.6 billion in January-May 2022, or 170.5% of the plan, while the sovereign debt repayment reached UAH169.3 billion.

The official exchange rate for June 30 is UAH29.25 to the dollar.