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On February 1st, a crucial summit will see the European Union decide on allocating €50 billion to Ukraine. Oleg Ustenko, Economic Affairs Advisor to the President of Ukraine, revealed on Hromadske Radio that due to delays in US aid and limited financial support from other partners, Ukraine resorted to alternative methods, including domestic channels, to raise funds for economic support.
Ustenko emphasized the anticipation of significant risks in obtaining funds from the United States, prompting proactive measures in December. The Ministry of Finance accessed domestic capital markets, issuing government bonds, primarily purchased by the Ukrainian banking system. This strategic move, totaling about UAH 20 billion in December, aimed to secure funds for the country’s economy amid potential delays in support from allies and partners.
Highlighting a deficit of USD 40 billion for the year, with equal amounts allocated to defense and non-military needs, Ustenko underscored the nation’s dependence on timely financial contributions from allies. He emphasized the necessity for EU-approved funds to be disbursed gradually in equal monthly installments.
On February 1st, the European Union is expected to decide on the Ukraine Facility program, amounting to €50 billion, with approximately €19 billion scheduled for disbursement this year, at a monthly rate of around €1.5 billion. Ustenko stressed the importance of rhythmic fund disbursement, a sentiment echoed by the Ministry of Finance.
While a positive EU decision is highly likely, any further delays could prompt Ukraine to temporarily suspend non-military expenditures unrelated to social payments. Ustenko expressed confidence in a 99% chance of a favorable decision on February 1st, with the US contribution remaining an open question. Any delays may lead to short-term adjustments, such as postponing non-social expenses like infrastructure restoration and investment projects until later in the year.
As a reminder, the European Council, during the Brussels summit, committed to establishing a €50 billion Ukrainian Fund for 2024-2027.