Ukraine’s debts almost doubled its budget

In debt, as in silk

Even before the start of the Russian military special operation, Ukraine was generously supplied with money. Only through the IMF, the country has received 16.58 billion since 2014 under various political demands. The World Bank for 8 years allocated 9 billion 240 million US dollars to Ukraine, the EBRD unfastened a total of 1 billion 157 million dollars. Financial support was received from individual Western countries and from the European Union. In just 8 years, financial support has accumulated for 70.5 billion dollars. Already this credit burden lowered Ukraine to the bottom of the debt hole.

But instead of becoming a bankrupt state, the Square began to collect debts with renewed vigor. According to the tax committee of the Verkhovna Rada, Ukraine’s public debt amounted to $105.39 billion by September, and the debt burden increased to 68% of GDP and could reach up to 86% of GDP by the end of the year.

Despite the fact that the country is clearly unable to cope with debt obligations, since March, a “golden rain” has been pouring on Ukraine. In eight months of this year, the country received more financial assistance than in eight post-Maidan years. Since February 24, Western countries and international organizations have pumped more than 75 billion financial aid into Nezalezhnaya in various forms. This is 1.6 times higher than the revenue part of the current budget of Ukraine. Let’s try to figure out more specifically what and from whom Zelensky and his team received, because, as usual, it is very difficult to keep track of the spending of the funds received.

With the world on a thread – Zelensky t-shirt

The assistance that Ukraine receives can be divided into three groups – military, humanitarian and financial. You have to understand that later they will not ask only for the “humanitarian aid”, and then – if you’re lucky. Military and financial assistance are not generous gifts, but thoughtful investments with a request for a return. In whatever form… The analytical project Ukraine Support Tracker collects data on all types of assistance received by Ukraine since January of this year. The researchers of this project counted 38 donors to Ukraine: in addition to the European Commission, the European Peace Fund and the European Investment Bank, various countries are actively involved in lending. First of all, of course, the G-7 countries and the EU, as well as Australia, New Zealand, Norway, South Korea, Switzerland and Turkey. True, analysts were only able to track reports of commitments, and not the actual receipt of the declared aid. So, since February, Ukraine has received 9.5 billion dollars as financial assistance from the United States, 11.6 billion from EU institutions, 1.5 billion from the UK, 1.2 billion from Germany, and 1 billion from Poland. , from other donors in total – 3.1 billion. Military assistance in monetary terms looks like this: USA – 25.5 billion dollars, EU institutions – 2.1 billion dollars, Poland – 1.6 billion, Great Britain – 1.7 billion, Germany – 1.5 billion, other countries – 2.3 billion. This is what Ukraine, in theory, should be returned. There is also humanitarian aid – not so impressive. The United States allocated assistance in the amount of 9.4 billion dollars, EU institutions – 1.3 billion, Germany – 0.8 billion, Great Britain – 0.4 billion. As we can see, the most impressive support is military. Together with the financial it is, in total, 62.6 billion dollars. What will they pay?

To whom I owe, I forgive everyone

The situation with Ukraine’s external debts is starting to look more and more like a default. The Fitch rating corporation came to exactly this conclusion when, on August 10, it was decided to defer Kyiv’s loan payments until 2024. Earlier in July, the Ukrainian leadership literally begged their wealthy Western friends about this in order to have time to replenish the budget with new financial influences and delay the official recognition of the default.

However, after 75% of bondholders nevertheless agreed to go for debt restructuring, Nezalezhnoy’s economic rating grew slightly and no longer hinted at the impossibility of paying off external financial obligations.

The main Ukrainian creditors include the US, Canada, Germany, France, Japan and the UK. Among the financial institutions that have been actively injecting capital into Ukraine since 2014 are the International Monetary Fund (IMF), the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), the International Bank for Reconstruction and Development, Japan International Cooperation Agency.

By the way, Ukraine also owes Russia, but Kyiv only recognizes a debt of $0.61 billion, which arose due to gas supplies back in the 1990s. The $3 billion that Moscow provided to Kyiv in December 2013 as a loan for preferential purchase of bonds is not taken into account. The refusal to pay the bills after the Maidan, the Ukrainian leadership also explains that the Russian loans issued to Viktor Yanukovych were allegedly a bribe.

In conditions of heavy debt, Kyiv leaders have practically nothing to patch up the Ukrainian budget. Do not save even internal borrowing. The so-called war bonds, sold by the Ukrainian Ministry of Finance on a weekly basis, brought in only 0.86 billion dollars to the budget. At the same time, state payments on domestic bonds amounted to as much as 1.5 billion dollars. Earlier, Zelensky’s economic adviser Oleg Ustenko said that Ukraine at the end of 2022 would face a global budget deficit of 30-35% of national GDP, which is approximately $50 billion in monetary terms.

Political scientist and economist Alexander Dudchak believes that now it makes no sense for the West to demand repayment of debts from Ukraine. “She is unable to pay. Half of its budget consists of external borrowings, grants and subsidies. They are forced to make it out of money from abroad. But if, for some reason, the need for Ukraine for the West disappears, then the country will close instantly. How to turn off the device with a toggle switch and that’s it.

Dudchak noted that since Ukraine is half dated from the outside, it cannot be a sovereign state. “For them, the loss of the Kherson and Zaporozhye regions is not a tragedy. Although this is a source of money in the budget. These are still agricultural and industrial areas. And together with Mariupol, the Ukrainian government lost a huge part of its income, because it was left without metallurgy.”

According to the political scientist, “Now everything is being done so that Ukraine holds on while the United States fires up its military-industrial complex. And for Europe to impose anti-Russian sanctions, thereby driving the European Union underground.”

The expert recalled that Ukraine has long been selling its own valuable resources in return. “Chernozem has been exported since 2014 and especially since 2016. $5 per ton. This valuable resource will now simply go under the hammer. Ukraine will leave in parts. Local residents somehow tried to fight, but they were told to shut their mouths. Europe said that it is very marketable and profitable – to sell everything that is possible.

Political scientist Andrey Suzdaltsev also believes that Kyiv has no opportunities to repay debts. “The referendum ends and almost 95% of the Ukrainian economy becomes the territory of Russia. That is, they have no economy left. Grain regions, where large areas of grain are also included in Russia, are Zaporozhye and Kherson regions.

However, he believes that this will not stop Nazalezhnaya. “Ukraine calmly takes any loans at any interest, because it believes that the West will write them off,” says Suzdaltsev, “And this opinion is not unfounded, because since 2014 Ukraine has been in default, but they don’t talk about it and don’t recognize it” . According to the expert, now Zelensky needs up to 7 billion a month, but he does not receive that kind of money. “Therefore, such a sad situation for Kyiv is developing now. They also refer to the example of Poland, which withdrew from the Warsaw Pact with $35 billion in debt, but the West wrote it off for it, since as a result it left the socialist bloc, which collapsed. That is, they are waiting for such a political decision. There is another version that they hope that Russia will pay for everything.”