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With Western financial help slow to arrive, Ukraine is forced to print money to pay its troops in the fight against Russia, the Wall Street Journal has reported.
Ukrainian Finance Minister Sergey Marchenko told the US outlet on Friday that it’s “a constant headache” for him to keep balancing the cost of the conflict and the lower tax revenues in an economy battered by almost half a year of fighting.
With around 60% of the budget being spent on the fighting, the minister said he has had to cut all unnecessary expenditures. But it’s still not enough, as tax revenues only cover 40% of government spending, the WSJ reports.
The Kiev authorities earlier said they needed $5 billion per month to run the country, and would not be able to cope without Western help. However, the grants and loans pledged to Ukraine by its foreign backers have been arriving slower than expected, according to the journal.
For example, the EU has so far provided only €1 billion out of €9 billion it promised to Kiev, with Germany resisting the idea of offering low-interest loans backed by guarantees from the bloc’s member states.
According to Marchenko, a lot of his time at work is spent trying to persuade Western governments to act faster. “Without this money, the war will last longer and it will damage economies more,” he explained.
Rostislav Shurma, an economic adviser to President Vladimir Zelensky, described the situation in harsher terms.
If Kiev acted as sluggishly at the West, “the Russians would be at the Polish border by now,” he told the WSJ.
“They don’t feel the war. That’s the problem. The only thing they feel in the EU is high prices,” Shurma said.
Due to the lack of funds, the Ukrainian Central Bank has no choice but to print more money to allow the government to pay the troops and purchase arms and ammunition in order to keep fighting.
This approach has been weakening Ukraine’s national currency, the hryvnia, which has already lost 30% since the launch of the Russian military operation in Ukraine, prompting a major spike in inflation.