WSJ: Ukraine struggles to pay its soldiers and has to print money for the military Taxes only cover about 40% of spending, while military spending exceeds 60%. Kyiv needs about $5 billion a month to cover the remaining expenses. The National Bank has to print money, which weakens the hryvnia and spurs inflation
Ukraine is struggling to pay salaries to military personnel and is forced to print money to cover military expenses, The Wall Street Journal writes, citing Finance Minister Sergei Marchenko and Deputy Chairman of the National bank of Sergey Nikolaychuk.
«Every day and night it is a constant headache»— Marchenko said.
Tax revenues cover only about 40% of government spending, while military spending exceeds 60%. The government needs about $5 billion a month to cover the remaining costs.
The National Bank has to print money so that the government can pay salaries to soldiers and buy weapons and ammunition, which weakens the hryvnia and fuels inflation. Nikolaychuk would like Western countries to allocate at least about $3 billion a month. The Central Bank demands from the government to raise taxes and cut spending. Marchenko, in turn, believes that “it is better to risk high inflation than not pay the salaries of soldiers.”
In early July, Prime Minister of Ukraine Denys Shmygal reported that the country's monthly spending on the maintenance of the armed forces since the outbreak of hostilities amounted to 130 billion hryvnia ($4.4 billion).
In early August, Kyiv's creditors, which account for about 75% of the bonds, agreed to freeze payments until 2024. This will allow Ukraine to save $5.8 billion, Bloomberg reported. The country's total external debt is $19.6 billion.
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Ukrainian President Volodymyr Zelensky has accused the EU of “artificial delay” with the provision of financial assistance to the country for «8 billion and urged not to make ordinary Ukrainians hostages of «indecision or bureaucracy» some EU leaders. At the same time, the Ukrainian leader noted, he believes that “this is still a mistake that will be corrected.”
At the end of June, the EU countries approved the provision of additional financial assistance to Ukraine for €9 billion. However, later the head The Ukrainian Ministry of Finance, in an interview with the Corriere della Sera newspaper, said that some states “are not ready to support Ukraine with such an amount.” The publication, citing sources, wrote that Germany was blocking the aid. The fact is that it provides almost interest-free loans to Kyiv with repayment in 25 years at the expense of its own European debt obligations, and Berlin is the largest guarantor of these Eurobonds. Germany has so far agreed only with the allocation of the first tranche of €1 billion, wrote Corriere della Sera.
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