Since the beginning of the year, the international media has been keeping a wary eye on Russian economic and financial indicators. This heightened attention is obviously due in part to the Russian attacks launched against Ukraine in February; many believe that if the Russian economy breaks, then the war will come to an end as well. However, global interest in Russian is also fueled by something else: economic indicators will reveal how effective the Western sanctions against Russia are. This question is essential to Europe and especially the West. After all, it will be difficult to justify maintaining sanctions if they only hurt Europeans rather than Russians and do not even really impact the aggressor.
Compared to the fact that even the most insignificant Russian economic data give rise to lengthy explanations, surprisingly little is said about Ukraine’s economic and financial situation. However, the general economic condition of Ukraine is rather dire.
Bankruptcy? Essentially.
Ukraine, as any other debtor, previously tried to maintain creditor trust by foregoing even the mention of possibly rescheduling payments. The war however forced changes here as well, as with so many other things. So much so, that according to market information, Ukraine made a deal with three quarters of their creditors at the beginning of August to freeze debt services for certain cases for up to two years. Two credit rating agencies classified the move as practically bankruptcy.
No money for their own accounts
But how is Ukraine doing financially? There is an answer to this question, provided in large part by official government statements. It is no surprise that war costs money; efforts to inhibit and push back against the Russian forces have a horrifying material and – due to the nature of war – human cost. According to certain Ukrainian sources, the armed resistance and occasional counter-attacks cost Ukraine five billion dollars every month. Other government statements said Ukraine was in need of nine billion dollars a month to eliminate the deficit. That amount should naturally be collected by the international community opposing Russia.