Defending against Russia’s war is resource-intensive and will not allow a return to the low level of debt Ukraine’s GDP had before the full-scale invasion or become less dependent on foreign aid, the Minister of Finance Serhiy Marchenko said in response to a Kyiv Post question during his press briefing on Thursday.
Ukraine’s state budget deficit was only 3.8% of GDP, while during Russia’s full-scale invasion it increased to 24%, decreasing to 19% after a successful debt restructuring deal.
“Theoretically, we decreased the ratio. But while the full-scale war continues, returning to ‘peacetime’ indicators, with pre-war debt level and budget deficit, is absolutely impossible,” Marchenko said.
He agreed that Ukraine is now dependent on total financial aid, allocating the volumes of 50% of the state budget from outside sources – Hr.2.2 trillion ($52.38 billion). “Such a situation is not sustainable,” he said.
During wartime it would be impossible to determine when Ukraine’s economy can become financially self-sufficient, according to the minister.
“We need to determine where the start of peacetime is, and then understand where is the point for us to say we have enough capacity for the medium-term,” he explained.
The ministry’s programs with foreign partners are aimed to help Ukraine achieve financial independence notwithstanding the war.
“But again, if we talk about how quickly wartime state finances will be adjusted to peacetime, we are talking about a 5-10 year perspective before reaching balanced indicators. Ukraine’s economy is currently at the maximum level allowing us to finance the Armed Forces,” Marchenko said.