Salaries and pensions may be delayed in Ukraine without Western aid: Cabinet of Ministers sets deadline

Ukraine may face delays in the payment of salaries and pensions for almost 12 million people if the West does not provide financial assistance in early 2024.

Source: This was stated by Yuliia Svyrydenko, First Deputy Prime Minister and Minister of Economy, in a comment to the Financial Times.

Details: As Svyrydenko reported, Ukraine may have to delay the payment of salaries to 500,000 civil servants and 1.4 million teachers, as well as payments to 10 million pensioners.

She said the lack of external support will push the Ukrainian economy back to "survival mode" after it began to recover in 2023.

In particular, Ukraine will need US$37 billion in external support next year.

Svyrydenko hopes that the EU will approve the aid to Ukraine in February and disburse the funds by the end of March.

Svyrydenko also called on the new Polish government to stop blocking Ukrainian border crossings. Due to the Polish protests, Ukrainian exporters lost US$160 million, and importers lost US$700 million.

The FT writes that Ukraine is trying to change its spending priorities. In particular, the Cabinet of Ministers "has increased a windfall tax on banks to 50 per cent and transferred revenues from a 1.5 per cent supplemental income tax from local to central government".

The Deputy Prime Minister told the FT that in the first 11 months of 2023, Kyiv collected US$4.4 billion more in taxes than in the same period last year. However, Svyrydenko emphasises that this is not enough.

Reminder:

US President Joe Biden's request for $60 billion is currently stalled in Congress, and the EU's €50 billion support package is blocked due to Hungary's veto.

At the same time, the EU is preparing a contingency plan worth up to €20 billion for Ukraine, which does not require Hungary's consent.

It is also known that Ukrainian export routes are restricted by the war, and the border with Poland is blocked.

However, the Ministry for Communities, Territories and Infrastructure Development and the Polish Ministry of Infrastructure have already agreed on an action plan to unblock the border.

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