Foreign aid has covered only half of Ukraine’s budgetary needs

Of the $22 billion needed to cover the budget deficit and the repayment of debts from March to June, Ukraine has only received only $10.2 billion in foreign loans and grants.

This is reported by the Centre for Economic Strategy states this based on data from the Ministry of Finance.

The current aid flow dynamic allows us to count on at least partial coverage of the deficit with the help of international aid during the second half of 2022.

For instance, with the funds received at the beginning of July, the total budget inflows from February 24th to July 5th exceed $11 billion.

In total, since the beginning of the full-scale war, international partners have pledged $32 billion in loans and grants to Ukraine.

Note that this sum is only the money which goes directly into the Ukrainian budget – excluding funds for humanitarian help and military needs.

The largest foreign donors are the European Union and the United States. Each has pledged more than $10 billion in funding for Ukraine.

These funds will not come in as a lump sum, but in instalments over several months, covering part of the country’s needs.

We remind the reader that, in the first months of the full-scale war, foreign aid arrived with a delay. The government was forced to raise funds through domestic government loan bonds.

The largest purchaser of bonds was the National Bank ($7.6 billion since February 24th), which de facto financed the deficit by printing the hryvnia.

«Such financing is justified, considering that most of the expenses go to military needs. However, in time, the financing of the budget to the expense of emission will accelerate devaluation and inflation. An increase in foreign aid pledges, and, more importantly, regular payments, would decrease this burden” according to Maksym Samoylyuk, economist at the CES.