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Economy Minister warns of delays to salaries, pensions if Western aid stops

by Elsa Court and The Kyiv Independent news desk December 27, 2023 9:29 PM 3 min read
Ukraine's First Deputy Prime Minister Yuliya Svyrydenko speaks at the Ukraine Recovery Conference in London on June 21, 2023. (Kirsty Wigglesworth/Pool/AFP via Getty Images)
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Ukraine may have to prioritize spending on defense above paying salaries if the EU and U.S. do not approve more aid soon, Deputy Prime Minister and Economy Minister Yuliia Svyrydenko said in an interview with the Financial Times on Dec. 27.

Congress has been unable to pass a $61 billion funding package for Ukraine amid months of infighting, while Hungary vetoed a four-year EU funding package for Ukraine worth $55 billion at the European Council summit in mid-December.

"The support of partners is extremely critical," Svyrydenko told the Financial Times. "We need it urgently."

"There's a huge risk of underfunding of certain social sectors," including delaying wages paid to 500,000 civil servants and 1.4 million teachers.

Payments to 10 million pensioners would also be at risk if foreign aid stops, according to Svyrydenko.

Ukraine could manage for a few months by borrowing money or transferring funds from the central bank to the government, but that could "unleash inflation and undermine financial stability," the Financial Times said, citing Western officials.

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An economic crisis could "derail Ukraine's economy and weaken its tax base, making the country even more dependent on foreign support," the newspaper said.

EU leaders were expected to reach a consensus on future financial assistance for Ukraine by the end of 2023, but Hungary refused to back the four-year funding package.

In an interview with the Kyiv Independent on Dec. 19, Ukrainian Foreign Minister Dmytro Kuleba said that the EU should approve financial aid for Ukraine within the next month.  

"It's all in the hands of the European Union itself, but the timeline that we were given is by the end of January," Kuleba said.

The bloc is reportedly considering creating a debt-based plan worth up to 20 billion euros to fund Ukraine and sidestep Hungary's veto.

The White House hopes that Congress will pass a funding request containing $61 billion for Ukraine in January to maintain support for Kyiv.

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