Increasingly dire prospects for Ukraine

Depressing prospects for Ukraine: a bankrupt state, an economy in free fall, and debts doubled.

Shocking numbers

It is also worth taking a look at some of the most important statistics on Ukraine: according to international estimates, Ukraine suffered a 35-45 percent economic decline this year and their budget deficit could reach 50 billion dollars by the end of the year. The situation is so hopeless that between March and May, Ukrainian state revenues covered only 40 percent of operating and other expenses. Not in the least because the war prevented nearly all Ukrainian exports.

The local central bank covered another 40 percent of the expenditure coverage, in part by printing money. The remaining 20 percent was made up of international grants and loans, among other things.

Is the West driven by money?

One big question is connected to the latter – that is, to international aid. Based on various statements, it can often be concluded that the West is approaching this war on an ideological basis by selflessly providing aid to Ukraine in its fight against the tyrant’s aggression. Their actions are purely driven by an effort to preserve freedom and not at all to earn a profit. However, the reality is that Ukraine’s public debt may jump from 50 percent of GDP (before the war) to 100 percent. In evaluating this indicator, it must be noted that not only does the debt increase, but GDP decreases. In addition, it is telling that only 18 percent, or about one fifth, of aid does not have to be paid back – the rest is nothing more than long-term loans.

Pressing questions

These numbers raise even more questions. On the one hand, who will provide the resources for Ukraine to stay alive financially? Certainly not the same European Union whose citizens will be paying astronomical gas and

electricity bills as a result of Brussels’ sanctions. On the other hand, how will Ukraine repay its enormous loans? There is no doubt that following the devastation of this war, certain creditors will demand the remaining Ukrainian national resources in exchange for the loans provided for war expenses.

Cover image: A damaged building of an industrial facility in Kharkiv on July 31, 2022, after a Russian missile attack hit the eastern Ukrainian city overnight (Photo: MTI/EPA/Sergey Kozlov)