Ukraine hails EU's approval of aid, says it hopes US follows suit

Ukraine is reliant on financial support from its Western allies to finances its pensions, public sector wages and social and humanitarian spending with Western money

Reuters
Published : 1 Feb 2024, 06:01 PM
Updated : 1 Feb 2024, 06:01 PM

Ukraine hailed the EU's approval of a major aid package on Thursday and said it hoped the U.S. would follow suit and unlock financing it called "critically important" for economic stability as its war with Russia approaches a third year.

First Deputy Prime Minister Yulia Svyrydenko told Reuters the government expected this year to receive 18 billion euros of the 50 billion euro, four-year EU package approved on Thursday. The first tranche of 4.5 billion euros is expected in March.

"It is very important for us to maintain macroeconomic stability. It is a prerequisite for economic growth," Svyrydenko, who is also the economy minister, said in an interview.

"Partners' aid is critically important to maintain this stability," she said, adding that she expected the United States to follow the example of the EU.

President Volodymyr Zelensky said the decision would strengthen long-term economic and financial stability.

Ukraine is reliant on financial support from its Western allies to finances its pensions, public sector wages and social and humanitarian spending with Western money.

Since the start of Russia's invasion on Feb. 24, 2022, Kyiv has received about $73.6 billion in international financial aid, including $27.5 billion from the European Union.

The government also needs financial support from the United States to be able to cover its budget gap of about $37 billion this year, Svyrydenko said.

Uncertainty surrounds US economic and military assistance for Kyiv, however, as the U.S. Congress considers a request from President Joe Biden in October to approve an additional $61 billion. The request has been stalled by Republicans' insistence that it be tied to an unrelated shift in immigration policy.

The Ukrainian government expects to channel 39 billion euros out of the EU facility to cover its budget needs until 2027.

Svyrydenko said that the EU package also included 8 billion euros aimed at supporting the private sector via loans and grants to businesses in sectors with the most potential to boost economic growth.

"Our global objective is to become self-reliant and to be more confident of the future thanks to the resilience of the Ukrainian economy," Svyrydenko said.

"It is very important for us to develop private investments."

The Ukrainian economy was devastated by the war at first. It shrank by about a third in 2022 as millions of people fled, cities and infrastructure were bombed, exports were disrupted and logistics and supply chains were ruined.

But businesses adapted and the economy has posted growth in 2023. The government expects gross domestic growth of about 4.6% this year after estimated growth of more than 5% last year.

Ukraine's sovereign dollar bonds gained as much as 1 cent, with 2028 notes XS1303926528=TE rising to 26.165 cents in the dollar, after the EU agreed on the package.