• March 25, 2023

25 december 2022 – Kiev Is Desperate For Weapons And Equipment.


With a 10-month military conflict ongoing, Kiev is becoming more desperate for supplies of weapons and equipment, as well as money. During Zelensky’s trip to Washington in late December 2022, the U.S. Congress approved another financial tranche for Ukraine. The European Union does not intend to stand aside either, providing Kiev with a large-scale financial aid of 18 billion euros, which Ukraine will start to receive from the beginning of 2023.

Back in the middle of this year, Western injections exceeded almost twice the annual budget of Ukraine, and it is evident that this will continue next year. The colossal financial expenditures are related not only to the need to purchase new types of weapons and ammunition, but also to eliminate the effects of Russian missile strikes on the Ukrainian electricity system. According to Ukrainian officials, Kiev critically needs the support of European allies in providing equipment to restore power supplies.

Taking into account the possibility of a reduction in Western monetary flows, Kiev also aims to continue issuing the national currency hryvnia. Since the beginning of this conflict, the National Bank of Ukraine has printed more than 364 billion hryvnias, which has predictably triggered a record increase in inflation in the country, reaching an annual rate of 26.5% by the end of this year. At the end of November, the Ukrainian authorities pledged not to conduct an additional issue of hryvnia in 2023; however, these promises were also not likely to come true.

On December 21, 2022, the IMF released a memorandum, which allows Ukraine to print up to 50 billion hryvnias in the first quarter of 2023. In order to receive the next $20 billion loan Kiev must meet a list of serious requirements, including a significant reduction of the Central Bank of Ukraine’s support of the national budget.

It is remarkable that receiving a new package of financial aid from the IMF in 2023 may cause new challenges for Kiev. Previously, Ukraine pledged to fulfill its budget commitments after receiving another tranche from the IMF. However, Kiev failed to meet most of the IMF requirements because of the worsening economic situation in the country.

Now Ukraine has to fulfill its financial obligations, after which the IMF financing program will be resumed. These requirements include tightening tax controls, reducing civil servants’ salaries and refusing to increase social benefits.

There is little doubt that by meeting these conditions, Kiev will be trapped in a vicious circle. Financial injections from the West and the growing foreign debt will provoke the economic deterioration in the country. Attempts to rectify the situation by taking new loans will lead to further stagnation in Ukraine’s financial system.

In the end, Ukrainian taxpayers will be the first to suffer, which however will not prevent Zelensky from solemnly announcing that the West will provide Ukraine with the next financial aid package.


Leave a Reply

Your email address will not be published. Required fields are marked *