Why does Ukraine need financial help?

Origin: Associated Press, David Mchugh and Hanna Arhirova

Ukraine spends almost all the money it brings in through taxes to fund the war. That leaves a huge deficit because there are other bills to keep society functioning, like old-age pensions and salaries for teachers, doctors, nurses and state employees.

At the beginning of the war, Ukraine resorted to having the central bank print new money, a dangerous stopgap because it can fuel inflation and destroy the value of the country’s hryvnia currency.

As donor contributions became more regular and predictable, Ukraine was able to halt the practice, and the budget passed by parliament in November does not rely on it.

One key accomplishment was adjusting old-age pensions, which can be about the equivalent of $100 per month, to compensate for inflation, said Hlib Vyshlinsky, executive director of the Center for Economic Strategy, a policy institution in Kyiv.

Printing money again and the resulting inflation “would bring a lot of people into real poverty,” he said.

To avoid that again, Ukraine needs “a decision by the start of February, and the money by the beginning of March,” Vyshlinsky said.