What to do if there is no plan B in case of problems with international aid channels

Origin: New Voice.

Ukraine’s budgetary needs are now essentially multiplied by two: we spend as much on defense against the enemy as on all other requests combined. For almost two years, almost all non-military needs of the country have been covered by grants or loans from democratic partners. This is about half of the state budget. Taxes and other domestic revenues were used for security and defense. Partners provided weapons and ammunition, and promptly opened alternative logistics channels for Ukrainians, allowing them to export goods and receive foreign currency. It would seem that in such conditions we can make it through 2024. But there is one thing.

Current resources are enough to survive, but not more. In addition, our main donors, the United States and Europe, are delaying their decision on whether to provide Ukraine with the same amount of financial assistance at the end of 2023. Ukraine has no plan B in case of problems with international aid channels. It is also hard to see any options for victory that would not rely on a radical increase in external assistance.

They will save on everything

On the European borders, supposedly open for Ukrainian exports, the “Solidarity Roads,” trucks with goods have been standing for weeks. First because of the protests of Polish farmers, then because of the blockade of Polish carriers. Our partner and friend Poland, which was the first to shelter Ukrainian women with children, which was and remains one of the leading advocates of military assistance to Ukraine and European integration, unfortunately, cannot cope with internal political issues. This situation threatens to spill over to other countries, as we have already seen in the case of grain. Whether 2024 will be as successful in terms of exports as 2023 is an open question. And exports mean foreign currency and jobs for millions of people.

There is no sign of massive foreign investment in reconstruction, let alone in business. After the conferences in Lugano and London, a meeting in Berlin is next in line. At the same time, in Ukraine, the government is cutting almost all reconstruction spending for 2024, as there is not enough money to cover even salaries. The budget deficit reaches half of expenditures, or about 20% of GDP, and savings will be made on everything.

Accordingly, from the point of view of economists, the primary task for 2024 is not economic. We need to ensure a package of sanctions against Russia and military assistance that will allow us to win, and then gain access to frozen Russian assets to use them for reconstruction, compensation for victims, and payment of post-war debt. The second goal is effective negotiations on EU membership, which will significantly change Ukraine’s geopolitical positioning and become a tectonic shift for government policies. The third goal is to use the resources available in the state budget and on the ground so that every hryvnia brings the maximum possible benefit, including unpopular reforms.