"A buffer of $12-15 billion is needed." Prolonged war will increase Ukraine's needs in 2025
Ukraine needs additional guarantees for receiving financial assistance from partners in the amount of $12-15 billion for 2025, as previous calculations were based on the forecast of the end of the war by the middle of 2024, which did not come true, Minister of Finance Sergii Marchenko said in an interview with RBC-Ukraine, commenting on the need to raise taxes and increase state borrowing.
"We go to our partners and say: there is a deficit of 500 billion hryvnias ($12.2 billion) and there is a solution to cover it. But we also expect that you will give us sufficient financial assurances for 2025 so that we can finance the budget," he said.
"Now, according to the IMF program, the assurances of our partners are not enough for us to submit a balanced budget for the next year. When the program was being prepared, one of the key parameters determined that the active phase of the war would last until the middle of 2024. As we can see, this forecast did not come true. Therefore, we are constantly talking to our partners that we need additional financial assurance, because the war will continue in 2025 and we need to have a buffer. We estimate the additional needs for 2025 at $12-15 billion," he said.
On July 25, Marchenko called on the G7 countries (USA, Japan, Germany, France, Britain, Italy and Canada) to accelerate the launch of the mechanism of additional loans to increase revenues to the budget of Ukraine (Extraordinary Revenue Acceleration Loans for Ukraine, ERA) and make it available from the first days of 2025.
In June 2024, the leaders of the G7 member countries agreed to provide Ukraine with $50 billion, using future revenues from the frozen assets of the Russian Federation.
According to the plan, the weight of the loan will fall on G7. Ukraine will receive money in the form of grants, so it will not be necessary to return it.