How much money does Ukraine need?

How much money does Ukraine need? I ask the question because the International Monetary Fund has just dropped the report to The eighth review From the Financial Support Program for Kev. But I really ask this because the answers choose one – read to me – shed light on much broader questions about the economy and war. Share your thoughts with us in [email protected].

The International Monetary Fund report is, in these circumstances, good news. Everything is close! Although he was severely assaulted by the armies of Russian President Vladimir Putin, the economy of Ukraine is strong, the policy is good and produces improvements in public financial resources, and reforms are going on the right path. To date, very impressive.

The analysis indicates that the International Monetary Fund Program – for $ 15.5 billion of financial aid over a period of four years – is on the right path, as well as a $ 153 billion financing package, which includes much greater contributions than the European Union and the United States (until this year) and other friends in Ukraine. About 40 billion dollars annually in “financing needs”, then this alliance has been able to provide it until now and must be able to continue to provide it, even if the United States allows Ukraine.

But the “financing needs” of $ 40 billion annually does not mean that only Ukraine (only!) Needs $ 40 billion annually. Timothy Ash, Financial analyst, a An angry blog post On how the risks of the International IMF analysis to hide a larger and more anxious truth. The ash makes the following notes. First, the total amount of assistance provided by Western countries, Ukraine, including the military group, is within $ 100 billion annually, according to the Premier League Institute Tracking Ukraine’s support. Second, even this is only enough to allow Kyiv to continue the fighting, not winning the war. Third, the International Monetary Fund accounts depend on the war at the end of 2025, or in mid -2016 in the scenario of the negative side. This is why financing quickly needs a decrease in small amounts of 2026 in the analysis of the International Monetary Fund.

Ash predicts that it will take 150 billion dollars annually, instead of $ 100 billion, to put Ukraine in a sufficiently dominant position to defeat the Russian invaders. who knows? But it is clear that it is much more than it is given to Ukraine now, allowing it to hold the line but not more. So ash is undoubtedly the fact that the numbers of the International Monetary Fund may give the impression that the financial needs of Ukraine are relatively modest, and therefore can be controlled. This allows Western technocrats to say that Ukraine was “fully funded” at the present time, which in turn spends the attention of Western political leaders about the truth of what they must do.

In fact, it’s worse: If the West Lowbals financial support is for Ukraine, the war will last longer than it is assumed to be reassured, and the leaders and the public put a bad surprise.

There are understandable reasons, if bad, for the International Monetary Fund’s number is what it is. One of them is that “financing needs” mean something different from technical economists from most people: it almost indicates the amount of the new borrowing you need to do in light of expected expenditures, current resources (including free military group), and debt for service. It does not represent any objective or realistic measure of the extent of “needs” in Ukraine actually in any unreasonable meaning. Another is that the International Monetary Fund cannot lend legally in a program that does not add, so on the day its analysis was to show the unparalleled financing needs is the day that it will have to withdraw the plug. This will be worse than a misleading number.

There are many other important notes that must be made about the Ukrainian economy and general financing; Some good, some of them are bad. Good news first: The Ukrainian government is improving in collecting resources (taxes and other revenues) locally. And note this by the International Monetary Fund, as it is placed in The latest “financial digestion” From Kyiv Economics College. In the first quarter of this year, tax revenues have greatly exceeded the government’s goal, partly due to politics improvements (but also inflation). Bad news: More than the budget tends to defense spending-if this continues, this is another reason for the belief that the estimates of the above needs are very optimistic-while social spending is pressed.

However, there is a flexible thing to look around the economic activity of the country. We hear a lot about how the Russian economy performs better than expected (a lot of it exaggerated). But look at the Ukrainian economy! A large part of the gross domestic product was stopped in 2022, reflecting the large lands occupied by millions of refugees. But since then, Ukraine has plowed. The International Monetary Fund puts registered and expected growth at 5.5 percent in 2023, at or near 3 percent in the next two years, and nearly 5 percent again in 2026 and 2027.

This compares positively with Russia. Ukrainian inflation is not worse than Russia, while it is Central bank interest rates less. It is recognized that unemployment is high – in part of Kiev’s function, which decides to spare its smaller men from the horrors of the front line.

But in general, the performance of Ukraine since 2022 has led to the output of Russia, and if the expectations of the International Monetary Fund are correct, its cumulative growth until 2030 will be more than twice the rate of the country that attacked it.

Another way to consider this is the best investment. The US dollar investor was buying a share of the Ukrainian GDP in 2022, he obtained a cumulative return for the nominal dollar by 27 percent by this year, compared to a 10 percent loss of the dollar on a share in the Russian gross domestic product. For comparison, the number for us GDP is 17 percent. If we believe that the expectations of the International Monetary Fund for 2030, the cumulative nominal dollar is 74 percent, 4 percent and 43 percent. Ukraine deserves to bet on money.

All this, however, is fraught with risks. Ukraine is struggling to attract capital; He greatly is forced to borrow from the European Union. Even for Incordisting numbers from the International Monetary Fund to add up to up, the continuous debt restructuring must be completed successfully. Also, Ukraine should not be left on the hook-as it is legally-for the loans “accelerating unusual revenues” (era) that is supported by profits on the outskirts of the banned Russian Central Bank, which are exposed to the risk of returning to Russia with every six months of voting on European Union sanctions. In terms of real economy, growth is clearly dependent on the war, but the International Monetary Fund and KSE also warns that the end of access to generous trade to the European Union and the loss of access to the Black Sea shipping road will give the economy a bad blow.

So how much Ukraine needs? The ash is right to say that it needs enough to win the war, and guess it at a value of $ 150 billion annually is a good thing like anything. KSE, and at the same time, Estimates It will be required of the $ 300 billion capital over a decade from abroad for “the investments needed to ensure improvements in productivity and strong economic growth.”

But the following is how you think about the matter: the total amount is adopted by an overwhelming majority on the extent that Ukraine can end the war on conditions in its favor – and this in turn depends on the amount of money that is now presented. ASH has a remarkable account to consider the comparison between an additional $ 100 billion over two years. It may take to help Ukraine to win the additional amounts that European governments have pledged to spend on defense because of the threat, as Russia is now seen as being formed:

Just now think about the cost of Ukraine’s lack of financing to win – the strategy we have followed over the past 3.5 years. This is that the West still has $ 100 billion a year, but we now hear that European NATO must increase its defensive spending from 2 % of GDP to 3.5 % and then 5 % in the end. Every 1 % of the GDP of European defense in NATO is $ 300 billion, so twice the annual cost of Ukraine’s financing to win and defeat Russia’s threat. If we end up increasing the European defense spending to 5 % of GDP, this represents 750 billion dollars, in the annual frequent defensive spending. Are we actually stupid? Therefore, we can increase funding to Ukraine by $ 50 billion annually for a period of two years to defeat Russia, or we can spend $ 750 billion a year a few years away.

This, I think, Lower Cost and return difference. Ukraine will be victorious and prosperous Ukraine (KSE expects a growth rate of 7 percent in 2027 if the war ends). This would benefit Western countries through smaller burdens on taxpayers, and gains for their investors who bring capital for reconstruction to Ukraine. The defeated Ukraine, or even one suffers from this war that goes in the same way, will not provide these economic opportunities.

Then there is a long term: the West Non -transfer Foreign currency reserves banned in Russia – about 300 billion dollars – to Ukraine as a payment of compensation, Moscow clearly condemns its destruction. There is only one alternative to giving this to Ukraine, which is ultimately allowing him to return to Russia, and Western taxi (most of them Europeans) to meet Ukraine financing needs instead.

A high -ranking European diplomat tells me that there is unlikely that there will be a renewed discussion in the upper part of the European Union institutions on transferring these assets unless there are new financing needs that are not affiliated with Ukraine. What I wrote above indicates that the moment of calculation may come sooner and not later.

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