The war, started by moscow, led the Ukrainian state budget to lose a large number of traditional income in the form of taxes, excise duties and customs payments.
According to an estimation given by the Ministry of Economy of Ukraine, direct infrastructure losses of the country due to the war reach no less than $120 bn or almost 3.6 trillion UAH (excluding the economic growth losses). Also, according to the National Bank calculations, every week of military operations “costs” the national economy more than 50 billion UAH.
World Bank experts predict the Ukraine’s GDP to decline by 45% in 2022, meanwhile the International Monetary Fund expects a 35% decline in the Ukrainian economy.
In addition to the material damage caused by the loss of military and civilian lives, the significant losses of human capital are being the consequences of the war. The International Labour Organization estimates that, since the beginning of the russian aggression, from 30 to 50 % of enterprises have ceased to operate completely. This caused a loss of 4.8 million jobs. Further military actions will increase the number of lost jobs to 7 million. However, if the fighting stops immediately, economic recovery will be accompanied by the return of 3.4 million jobs.
On April 21, 2022 the National Council for the Recovery of Ukraine from the consequences of the war to determine the recovery parameters and modernization of each economic sector within the United 24 was established by the Decree of the Ukrainian President (Global initiative to support Ukraine in the fight against russian aggression launched by the President of Ukraine).
On May 2, 2022, the Verkhovna Rada of Ukraine presented a comprehensive “Economic Renewal Plan of Ukraine”, providing full access to the G7 and EU markets, EU membership, as well as economy liberalization and deregulation.
Economic Policy Research Center (the International Non-Governmental Research Center on Supporting Reforms in Ukraine and Achieving Sustainable Economic Growth, CES Ukraine) published the project “Recovery Plan of Ukraine after the War”, prepared with the participation of economists of the Stockholm School of Economics, University of Berkeley, MIT, Harvard, Paris School of Political Studies of the Geneva Institute of International Relations. The project provides Ukraine with 200-500 billion euros of economic assistance for the rehabilitation of infrastructure, housing and transport.
European Council agreed to create a “Solidarity Trust with Ukraine” for its recovery after the war with russia.
A loan agreement in the amount of 100 million dollars on preferential terms was signed between Ukraine and Japan, which will be directed to the provision of priority social and humanitarian needs, settlers` health care and support.
The EU Commission is about to offer a new bailout package to Ukraine, containing long-term financing commitments for the rehabilitation of the country’s infrastructure, including the agricultural sector.
Since the beginning of the war The European Union has already allocated 600 million euros in soft loans and is accelerating an approval of an extra 600 million euros.
Ukraine has already received $1.4 billion in emergency support from the IMF.
The World Bank approved an additional aid package for Ukraine which is $723 million. The package consists of an additional $350 million loan and a $139 million guarantee, as well as grant funding of $134 million and parallel funding of $100 million.
Analysts of S&P Global Market Intelligence predicts the Ukrainian economy to return to pre-war indicators in 5 years.
The European Bank for Reconstruction and Development predicts that if a ceasefire is achieved within 3-4 months, Ukraine’s economy will be able to resume in 2023.
According to this scenario, next year the Ukraine’s GDP should recover by 23%. If the russia-Ukraine war lasts more than 3-4 months, more “painful measures” will be needed to support the country’s economy.
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