KYIV - Ukraine hailed the European Union’s approval of a major aid package on Feb 1, with President Volodymyr Zelensky saying the backing was a “clear signal” both to Russia and the United States, where an assistance package has been held up in Congress.
His government said the deal was “critically important” for Ukraine’s stability ahead of February’s two-year anniversary of Russia’s invasion.
“It is a clear signal to Moscow that Europe will stand firm and cannot be broken by any destructive waves devised by the Kremlin,” Mr Zelensky said in his nightly video address.
“At the same time, it is a clear signal across the Atlantic, a signal that Europe is assuming its responsibilities. Security responsibilities. Strong responsibilities. We await decisions from America.”
Ukraine’s First Deputy Prime Minister Yulia Svyrydenko said the government expected in 2024 to receive €18 billion (S$26 billion) of the €50 billion, four-year EU package approved on Feb 1.
The first tranche of €4.5 billion is expected in March.
“It is very important for us to maintain macroeconomic stability. It is a prerequisite for economic growth,” said Ms Svyrydenko, who is also the economy minister.
“Partners’ aid is critically important to maintain this stability,” she said, adding that she expected the US to follow the EU’s example.
Ukraine is reliant on financial support from its Western allies to finances its pensions, public sector wages and social and humanitarian spending.
Since the start of Russia’s invasion on Feb 24, 2022, Kyiv has received about US$73.6 billion (S$98 billion) in international financial aid, including US$27.5 billion from the EU.
The government also needs financial support from the US to be able to cover its budget gap of about US$37 billion in 2024, Ms Svyrydenko said.
Uncertainty surrounds US economic and military assistance for Kyiv, however, as the US Congress considers a request from President Joe Biden made in October to approve an additional US$61 billion.
The request, which also includes an allocation for Israel, has been stalled by Republicans’ insistence that it be tied to an unrelated shift in immigration policy.
The leader of the US Senate said on Feb 1 that lawmakers would release within days the text of the legislation concerning US security assistance and changes to immigration policy.
The Bill is expected to pass the Senate, where Mr Biden’s fellow Democrats have a slim majority, but its prospects in the Republican-controlled House of Representatives are much less certain.
The Ukrainian government expects to channel €39 billion out of the EU facility to cover its budget needs until 2027.
Ms Svyrydenko said the EU package also included €8 billion aimed at supporting the private sector via loans and grants to businesses in sectors with the most potential to boost economic growth.
“Our global objective is to become self-reliant and to be more confident of the future thanks to the resilience of the Ukrainian economy,” Ms Svyrydenko said. “It is very important for us to develop private investments.”
The Ukrainian economy was devastated by the war at first. It shrank by about a third in 2022 as millions of people fled, cities and infrastructure were bombed, exports were disrupted and logistics and supply chains were ruined.
But businesses adapted and the economy has posted growth in 2023. The government expects gross domestic growth of about 4.6 per cent in 2024, after estimated growth of more than 5 per cent in 2023.
Ukraine’s sovereign dollar bonds gained as much as one cent, with 2028 notes rising to 26.165 cents on the dollar, after the EU agreed on the package. REUTERS
