Ukraine's Budget Constraints
Ukraine's Finance Minister Sergii Marchenko warned that the country is facing its toughest budget limits since the war began in 2022. He said that non-military spending may need to be cut unless more funding comes from allies. Marchenko shared these views in an exclusive interview with Euronews. He highlighted the urgency as Ukraine prepares for a tough winter amid rising Russian attacks.
Marchenko noted that liquidity issues are already visible. The country may have to delay payments not related to the war due to a lack of funds. "We already see some liquidity issues, and we envisage some shortages in our budget," he said. He pointed out that the intensity of Russian attacks has sharply increased in August, putting more pressure on the financial situation. The finance minister is drafting a new budget that expects the war to continue into 2027. This budget includes a projected funding shortfall of $32.6 billion.
Marchenko also urged the European Union to rethink the use of frozen Russian assets to help meet Ukraine's financial needs. He suggested that Belgium transfer control of these assets to the EU. This would allow more countries to discuss the issue. Recently, Sweden, Poland, the Netherlands, and Spain called on the European Commission to revive talks on using around €200 billion in frozen assets as a reparations loan to Ukraine. However, Belgium has raised concerns about the legal and financial risks of this plan.
Related coverage: Irish Fiscal Council Criticizes Government’s Budget Plans.
The ongoing financial strain in Ukraine could impact international markets, especially in defense and reconstruction sectors. Investors may respond to possible delays in funding and infrastructure projects. This could lead to increased volatility in European markets.
Stay tuned for updates on the EU's response to Ukraine's funding requests and any upcoming discussions about the frozen assets.
Based on reporting by: euronews.com