10 May 2023 11:32

NBU expects international financing for Ukraine to drop to $26.4 bln in 2024

MOSCOW. May 10 (Interfax) - The National Bank of Ukraine (NBU) expects inflows of international financial aid to total $42.2 billion in 2023, but drop to $26.4 billion in 2024 and $16.8 billion in 2025, Ukrainian media reported, citing the NBU's inflation report.

The amount of international aid is expected to increase in 2023, while its decrease in 2024-2025 will reflect the further recovery of the budget's domestic resource base and the reduction of the deficit as security risks decrease, the NBU said.

The decrease in inflows from international partners will be partly offset by the growth of export revenue, the NBU said.

Ukraine received $32.2 billion in international financial aid in 2022, including $18 billion in the form of grants, the NBU recalled. In the first quarter of 2023, the country received $11 billion, including $3.7 billion in grants.

The NBU expects international financial aid to total $13.8 billion in the second quarter, and then drop to $9.7 billion in the third quarter and $7.8 billion-$7.7 billion in the fourth quarter and the first quarter of 2024.

The main assumption in the forecast is that the conflict in the country will end in early 2024, the NBU said. However, if it lasts until the middle of next year, economic growth in 2024 will remain at this year's level of 2% instead of the 4.3% forecast in the NBU's baseline scenario, it said.

However, the negative effects will be partially offset by large amounts of international aid, the NBU expects. In the IMF's negative scenario, financial needs over the four years of the EFF program guaranteed by international partners will increase to $140 billion from the $115 billion in the baseline scenario, the NBU said.

At the end of April, the NBU raised its forecast for the country's international reserves as of the end of 2023 to $34.5 billion from $27 billion in its January forecast, including because of an improved outlook for international financing.

Thanks to record foreign aid of $5.6 billion in April, Ukraine's international reserves increased by 13% or $4.07 billion to $35.94 billion.