Ukraine Needs Nations to Follow Up on Aid to Fill $5 Billion Gap

(Bloomberg) — Ukraine wants to make sure governments that offered assistance this week during meetings in Washington follow through and turn their promises into real support, one of the nation’s top financial officials said.

Ukraine needs $5 billion to $7 billion a month to fill a budget gap caused by Russia’s invasion, deputy central bank governor Sergiy Nikolaychuk said in an interview in Washington. 

While pledges made at the International Monetary Fund and World Bank spring meetings will help fill that deficit, the amount that the country can count on going forward is unclear, and translating words into actual funding will require more work, he said.

Nikolaychuk said it hasn’t been clear over the few days the exact amount of all the pledges, since support could come in a variety of forms, including cash meant for governmental expenses, military backing, humanitarian support or aid for refugees in neighboring countries.

“There are a lot of promises, there are a lot of pledges. But in order to transfer them into real financial support, definitely the huge homework should be done by our partners in different countries,” as well as by the international financial institutions and Ukrainian authorities, he said.

Without estimating an amount of pledges so far, he said that they would likely be “enough to cover a few months. But the longer the war lasts, the bigger will be our needs in order to sustain this combat.”

Fully rebuilding and transforming Ukraine for the future following Russia’s invasion will cost $600 billion, Prime Minister Denys Shmyhal said at a World Bank event on Thursday, calling on members of the IMF to donate 10% of their reserves received from the institution to support the effort.

The campaign to get countries to reallocate those assets, known as special drawing rights, or SDRs, for Ukraine is in the early stages, with Ukraine having begun discussions with representatives of other central banks, and some of them have restrictions on their ability to on-lend SDRs, Nikolaychuk said. 

He added that frozen Russian wealth in the U.S., Canada and the European Union should be used to pay for rebuilding the property destroyed by Russia during the war.

World Bank President David Malpass said Thursday that the priority for financing should be on meeting Ukraine’s needs in a way that minimizes its future debt burden.

In approving a $1.4 billion emergency loan for Ukraine last month, the IMF said that the nation’s debt remains sustainable if there’s a fast end to the war.

“Definitely it’s clear that the war puts a sizable drag on our debt sustainability,” Nikolaychuk said. “The longer war lasts, the more difficult it is for us to be able to service our debt.”

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