Ukraine, which has been struck by compounding financial woes since the Russian invasion began on Feb. 24, has reported a huge budget deficit of over $11 billion, cumulatively, during the first seven months of 2022, according to public remarks by the Ukrainian Ministry of Finance on Aug. 1.

Despite the staggering numbers, they are in fact an improvement from earlier months of the war: July’s deficit was a mere $130 million, in turn a considerable drop from June’s deficit of $3.6 billion. The Ministry credited a strong increase in foreign assistance as having lessened the bleed from Kyiv’s now-empty coffers.

According to the Finance Ministry, grants from the U.S. and European Union (EU) were over $1 billion in June – more than double the amount that Ukraine had received in May.

As per finance norms in Ukraine, grants are counted as state revenue as they do not need to be repaid; whereas a loan is classed as a liability rather than an asset. The large quantity and high value of loans already given to Ukraine makes the option of further loans unlikely, as the government debt to GDP ratio is considerably higher than what most economists believe is “safe” for a country to maintain.

Ukraine’s economy has cratered as a result of the Russian invasion. Last week, the Ukrainian National Bank (NBU) said that the post-war recovery would take years to reach completion. Referencing the examples of other post-war economies, the NBU went on to say that they expected unemployment to decline to 27% during 2023, and by the end of 2024 to fall to 18.2%.

Today, roughly 35% of Ukrainians say that they do not have a job but are seeking one, while the majority of workers report that they have seen their wages slashed in the past few months, with polling indicating that they put this down to the unprovoked war.

In addition to high unemployment, Ukraine has recently been cursed with quickly rising inflation, wreaking havoc on the purchasing power of citizens who are unsure of what the future holds. The United Nations, last week, said that roughly a third of Ukrainians now had to deal with routine hunger.

 

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