Ukrainian MinFin fears problems financing budget at start of 2024
MOSCOW. Dec 21 (Interfax) - The Ukrainian Finance Ministry sees risks with financing the state budget in January-February 2024 and plans to mobilize internal resources to cover budget expenses.
"We have risks in January-February. Unfortunately, in January-February the decisions made by partners are not enough [to finance the budget needs for this period] for us to cope on our own. Therefore, we now have a plan B in place," Ukrainian media quoted Finance Minister Sergei Marchenko as saying during an online conference titled "Macroforecast 2024: How GDP, Prices and the Exchange Rate Will Change," broadcast on YouTube.
"We will bring as close as possible [the timing of receipts for the budget], those resources that we can bring closer to January-February," he said.
Those measures in include advance payment of dividends from state-owned companies, as well as an increase in the volume of borrowing on the domestic market, he said.
"The situation is not critical, but there is an understanding that during this period we need to rely as much as possible on internal resources," he said.
He also said spending on security and defense was a factor of uncertainty.
"If there are no specific features, then the situation is under control and we can finance everything. But the security and defense sector creates the greatest uncertainty for us. We cannot know in advance at what point something will be missing there. There are too many questions regarding the effectiveness of the use of funds specifically in this direction," Marchenko said.
The minister said he was confident the planned amount of international financial assistance would arrive in 2024, but question markets remained over the regularity of the flow of funds.
"The funding needs for next year will be met in the amount that we expect. And we have no doubt about it. The only thing that worries us at the moment is the regularity of these funds and their timing," he said.
Marchenko said earlier that Ukraine would need $37.3 billion of external financing in 2024 and expected to receive $42.3 billion from donors in 2023.
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.
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, according to IMF data.