Without help from the US, Ukraine will have to expand its borrowing: What else is foreseen in Ukraine’s Plan B?
Ukraine is working on a plan to cover the budget deficit without US support. The plan includes three elements: expanding domestic bond sales, raising taxes, and cutting spending. It is to be proposed to the IMF during a three-day staff visit to Kyiv this week.
“The Ministry of Finance and the National Bank believe that there is a risk that the IMF’s board of directors will not approve the next loan disbursement without a fiscal plan if US funds are still blocked,” Bloomberg explained.
According to the plan, the primary replacement source for American funds is the expansion of domestic public borrowing – at least $5B this year.
The head of the European Parliament’s budget committee estimated that €50B from the EU would not be enough for Ukraine. After all, Ukraine’s non-military needs amount to €3B per month – €36B per year. Under the four-year program, Ukraine will receive €12.5B per year. The EU and the US should cover 50% of annual non-military needs each (€18B each).
Therefore, Ukraine will face an annual €5.5B budget shortfall.