Ukraine’s wartime defense spending will remain high next year, underscoring the need for allies to provide war-risk insurance to help attract investment, the nation’s finance minister said.
(Bloomberg) — Ukraine’s wartime defense spending will remain high next year, underscoring the need for allies to provide war-risk insurance to help attract investment, the nation’s finance minister said.
“Without international support, without war-risk insurance, we will not attract as much investment as we need for reconstruction,” Finance Minister Serhiy Marchenko told Bloomberg Television on Friday. “We need investment right now — we don’t need to wait until the war ends, because otherwise we will not receive initial boost for this victory.”
The UK government led an initiative for war-risk insurance backed by the Group of Seven last month, aimed at bolstering private investment in Ukraine’s war-battered economy. The World Bank has put the cost of reversing the devastation wrought by Russia’s invasion at more than $400 billion over the next decade.
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Marchenko said that Ukraine’s defense spending won’t ebb next year, with little scope to narrow the budget deficit, though the government has been able to prop up revenue collection.
“We are trying to do our homework,” Marchenko said, adding that economic growth is expected at as much as 3% this year.
The European Union is set to approve a €50 billion aid package for Ukraine over four years, with state financing heavily dependent on foreign assistance. Kyiv expects to receive €18 billion in EU grants and loans and some $10 billion from the US, with an expected budget gap ballooning to $42 billion. A deal with the International Monetary Fund will bring in another $4.5 billion in 2023.
“We try to attract partners’ incentives to help Ukraine to cover deficit needs in 2024,” Marchenko said. “Now, we have the EU facility program and we would like to see other G-7 nations also to step in and help Ukraine.”
Marchenko reinforced a pledge to protect investments and root out corruption, which has been endemic in Ukraine.
“We try to mitigate all possible risk of corruption — it is our choice and we will prevail to show all civilized world that Ukraine is moving in the right direction,” Marchenko said.
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