Ukrainian Finance Ministry expects another $3.3 bln in foreign funding by year-end

MOSCOW. Dec 20 (Interfax) - Ukraine has attracted over $39 billion in foreign financing since the beginning of 2023 against $32.1 billion for the whole of 2022, Ukrainian media reported, citing Ukrainian Finance Minister Sergei Marchenko.

"By the end of this year, donor assistance will reach about $42.3 billion," he was quoted as saying in a statement at a meeting with the governors of the central banks of the Group of Seven (G7) countries, the leadership of the European Union, the International Monetary Fund (IMF) and the World Bank the previous day. Thus, an additional around $3.3 billion is expected by the end of December.

Ukraine's need for foreign funding in 2024 has been reduced from the initial $41 billion to $37.3 billion due to measures to maximize the state budget revenue, step up activities on the domestic borrowing market, as well as lower all capital expenditures of the state budget.

The priority tasks for financing in 2024 are the military campaign and social support, the former will be funded exclusively from the domestic budget revenue, and Ukraine counts on its partners' assistance in funding the latter.

The desired volume of foreign funding in 2024 identified by Marchenko, including grants, is confirmed in the IMF materials based on the results of the second review of the Extended Fund Facility (EFF) Arrangement. "Support from official donors will remain the main source of financing the deficit next year," the IMF says.

Net financing through the placement of domestic government bonds, although significantly lower, will also remain an important source of financing, amounting to $3.8 billion under the baseline scenario, the IMF said.

"Net domestic market issuance and the use of unencumbered deposits also serve as an important shock absorber and are easier to increase quickly compared to external financing. However, the risks associated with this financing plan are significant, and it is important that guaranteed external financing is provided in a timely manner," the IMF said.

The materials of the second review of the EFF program indicated that the United States is expected to provide $8.5 billion, Japan $2 billion, the United Kingdom $1 billion, and another $20.4 billion expected from the European Union, Canada and Japan in 2024.