Ukraine may finance budget deficit with proceeds from frozen Russian assets
Ukraine will be able to finance its $10-15 billion budget deficit from frozen Russian asset revenues starting in 2025, Interfax-Ukraine reported on Jan. 17, citing Deputy Head of the President's Office Rostyslav Shurma.
In 2024, Ukraine will cover the budget deficit of about $40 billion mainly with the aid from international partners. Subsequently, the budget deficit of $10-15 billion could be covered by revenues from frozen Russian assets.
"We are absolutely confident that both [aid] packages will be approved by the US and the EU,” Shurma said during a discussion at the Ukrainian House in Davos, organized by the Pinchuk Foundation, Horizon Capital, and WNISEF.
“This means that 2024 will be closed... The question is what's next... because we understand that, roughly speaking, $10-15 billion will be needed beyond that."
This amount roughly corresponds to the proceeds from frozen Russian assets, taking into account the market interest rates on treasury bills or bonds from AAA-rated issuers, which have risen to 4-5% per annum.
Read also: European Commission eyes how to transfer €15 billion in frozen Russian assets to aid Ukraine
It is much easier to legally resolve the issue of providing these revenues to Ukraine than the issue of confiscating the Russian assets themselves, according to Shurma.
However, the use of frozen assets to rebuild Ukraine should not be expected to happen quickly, said US Special Representative for Ukraine's Economic Recovery, Penny Pritzker, in remarks made in Davos on Jan. 15.
The Biden Administration has affirmed its support for a bill that would allow for the confiscation of some of the $300 billion of frozen Russian assets for reconstructing Ukraine, Bloomberg reported on Jan. 10.
The European Commission (EC) is gearing up to channel €15 billion in frozen Russian assets to provide crucial financial support to Ukraine, though the plan requires unanimous backing from all European Union member states, the Financial Times reported.
President of Ukraine Volodymyr Zelenskyy announced on Dec. 17 that the outlines of decisions necessary for the transfer of frozen Russian assets to Ukraine are already being prepared.
Read also:
Zelenskyy’s office announces shift to 'Plan B' if Western aid is not allocated by year's end
Zelenskyy calls for transfer of frozen Russian assets to Ukraine
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