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Ukraine's economy on brink of collapse
Ukraine's economy on brink of collapse

Russia Today

time26-06-2025

  • Business
  • Russia Today

Ukraine's economy on brink of collapse

Ukraine's economy is teetering on the edge of a complete collapse as it faces the possibility of a drastic decrease in Western aid and fading chances of a ceasefire anytime soon, the Washington Post reported on Wednesday. Many Ukrainians had hoped for a swift end to the conflict after US President Donald Trump took office. However, those expectations have crumbled as his push for a settlement has stalled, threatening to pull down Ukraine's already fragile economy, the article says. The Ukrainian economy remains afloat largely due to extensive Western financial backing. However, officials and analysts interviewed by the paper warn that current aid levels may not be enough to sustain the state in the near future. According to the Post, the only significant investment initiative in sight is a deal that gives the US priority access to Ukrainian natural resources, but it is still years away from implementation. Encouraged by Trump's pledges, private investors initially positioned themselves for a post-conflict reconstruction boom, but the optimism soon soured due to the slow progress towards peace. 'The ceasefire was at the heart of all economic forecasts, that it could come somewhere in mid-2025,' a senior Ukrainian official told WaPo. 'A positive impact on the economy this year is no longer being considered,' he added, noting, though, that 2026 remains a potential turning point. Last week, Ukraine's Vladimir Zelensky appealed to Western donors for $40 billion annually in budgetary support. Western aid is predominantly being used to cover education and social welfare expenses. However, Ukrainian officials told the outlet that next year the mechanism will only cover about half of Kiev's most urgent needs. Moreover, Finance Minister Sergey Marchenko warned that even if the conflict ends soon, the government would likely have to cut billions in expenditures, although experts warn that Kiev has little scope to reduce costs in healthcare or education. In May, Marchenko warned that Ukraine would be unable to repay its foreign creditors in the next 30 years. He added, however, that Kiev intends to continue borrowing. Ukraine's public debt is approaching 100% of GDP. Russian President Vladimir Putin has stated that Ukraine would collapse within weeks without continued Western military and financial support.

Ukraine to default on payment to GDP warrant holders
Ukraine to default on payment to GDP warrant holders

Reuters

time30-05-2025

  • Business
  • Reuters

Ukraine to default on payment to GDP warrant holders

LONDON/KYIV, May 30 (Reuters) - Ukraine's finance ministry said on Friday it would not be paying more than half a billion dollars due to holders of its GDP warrants, marking the first payment default since it created the instruments. The war-ravaged country said it owes $665 million on June 2 to holders of the $3.2 billion worth of warrants, based on 2023 economic performance. Last year, Ukraine's parliament approved a payment moratorium on the GDP-linked securities from May 31. "Ukraine remains committed to implementing a comprehensive, fair and equitable restructuring of the GDP-linked Securities," it said in a statement, adding it must comply with debt targets outlined in its IMF programme and in line with the comparability of treatment with official lenders. Ukraine created the instruments - fixed income securities indexed to economic growth - to sweeten its 2015 debt restructuring. But their complex structure meant they had not been part of last year's broader $20 billion restructuring. Ukraine's economy cratered after Russia's full-scale invasion in 2022, falling close to 30%. And while its economy staged modest growth in 2023 and 2024, its gross domestic product remains below the pre-war level. Finance Minister Serhii Marchenko described the warrants, with a payout linked to growth, as "designed for a world that no longer exists".

EU Agrees to Reinstate Trade Quotas on Ukraine as War Drags on
EU Agrees to Reinstate Trade Quotas on Ukraine as War Drags on

Bloomberg

time23-05-2025

  • Business
  • Bloomberg

EU Agrees to Reinstate Trade Quotas on Ukraine as War Drags on

The European Union has agreed to reinstate quotas on imports of several agricultural goods from Ukraine, adding to the challenges faced by its war-hit economy. The limits, which were eliminated in the early stages of Russia's invasion in 2022 to support local farmers, were reimposed by the European Commission on Thursday, a spokesperson told Bloomberg News. The renewed restrictions will come into effect on June 6.

Ukraine considers ditching dollar as reference currency
Ukraine considers ditching dollar as reference currency

Russia Today

time08-05-2025

  • Business
  • Russia Today

Ukraine considers ditching dollar as reference currency

Kiev is considering a switch from the US dollar to the euro as its reference currency, the head of the National Bank of Ukraine (NBU) said on Thursday. These comments come despite the recent signing of a comprehensive bilateral minerals agreement with the White House. Kiev has repeatedly expressed its desire to join the EU. However, Ukraine's 'immediate' accession has been consistently opposed by several member states. Hungary has voiced concerns over corruption, the treatment of ethnic minorities, and economic competition, particularly in agriculture. Other EU nations, including Slovakia, France, and Germany, have also expressed reservations, emphasizing that Kiev must meet existing reform benchmarks before talks proceed. According to NBU Governor Andrey Pyshny, potential EU accession has prompted the central bank to assess whether the national currency, the grivna, should be more closely tied to the euro instead of the dollar, according to Reuters. The top official also cited 'a strengthening of the EU's role in ensuring our defense capabilities, greater volatility in global markets, and the probability of global trade fragmentation' as major reasons for the shift. The central bank chief acknowledged that the move would be 'complex and require high-quality, versatile preparation.' Earlier this week, European Commission (EC) President Ursula von der Leyen called for Ukraine's EU accession talks to be launched as early as this year. It was granted EU candidate status in 2022, a few months after the escalation with Moscow, but Brussels has not set a definitive timeline for the accession. Von der Leyen suggested that faster EU accession could strengthen Ukraine's negotiating position with Russia and open the door to increased investment in the country's defense sector. She emphasized that Brussels is working to open the first cluster of accession talks and to open all clusters in 2025. Pyshny said that closer ties with Europe and the normalization of economic conditions are expected to drive modest growth in the coming two years, with the GDP projected to rise by 3.7–3.9%. However, he noted that the overall economic outlook depends heavily on the course of the ongoing conflict. In order to join the bloc, the EU has demanded that Ukraine implement a comprehensive set of governance reforms, fight rampant corruption and harmonize its legislation with EU law. Full membership also necessitates the unanimous approval of all EU nations. Ukraine's parliament, meanwhile, has voted universally in favor of ratifying the minerals deal signed with the US, according to Reuters, in the hopes that it will secure future military assistance from Washington in the ongoing conflict. During the Biden administration, the US provided more than $174 billion in aid to Kiev following the escalation of the Ukraine conflict in February 2022, including dozens of military packages. The approach has significantly shifted under President Donald Trump, who is pushing for direct negotiations between Moscow and Kiev and has insisted that assistance can only continue on terms that favor American interests.

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