Shmyhal: One-third of Ukraine's economy is gone

Prime Minister of Ukraine Denys Shmyhal estimates the country's economic downturn at more than 30% for the previous year and expects growth of 0.3% this year.

"According to preliminary estimates, the downturn in 2022 was more than 30%. One-third of our economy is gone... Inflation is slightly higher than 26%," Shmyhal told the German magazine Spiegel.

He noted that many enterprises were physically destroyed, such as Azovstal steel works which was one of the leading metal manufacturers in the country.

At the same time, Shmyhal called it important that the Ukrainian economy paid 10% more taxes than in 2021 despite such a drop. The government official explained this by the fact that entrepreneurs feel responsible and want to support the army and the country.

"All the taxes we collected were transferred to the army needs. The other half of the budget is financed thanks to the help of our partners, in particular Germany," the PM noted. He thanked Germany for the help it provides to our country. In particular, for a EUR 1 billion grant and for hundreds of millions of euros in loans, for spending to restore the Ukrainian energy sector and other areas.

Evaluating the prospects for 2023, the Head of Government mentioned the GDP growth projected at 0.3%. This forecast is based on the worst possible conditions: the war will continue for another year and the energy infrastructure will be struck with missiles. The budget deficit is projected at almost $38 billion. Shmyhal said that Ukraine receives EUR 18 billion in financial aid from the EU, another $10 billion comes from the United States. Now Kyiv is working with the International Monetary Fund on a new structural aid program which is designed for at least four years and provides for $16-20 billion

Speaking about how much the actual post-war reconstruction will cost, Shmyhal mentioned the sum from 600 billion to 750 billion euros. At the same time, he emphasized that reconstruction should not put a burden on taxpayers in Europe or the USA, and the aggressor must pay for the damage, for lost lives, for lost opportunities. Damages should be compensated at the expense of Russian assets frozen abroad, which today total $350-500 billion. In Ukraine, the assets of two Russian banks to the tune of 423 million euros were confiscated.

"We believe that these assets and their confiscation or other use must become the main source to finance recovery," the politician concluded.

He also pointed out the interest of private investors in reconstruction programs. In particular, he noted that the German economy is already preparing for the largest reconstruction project in Europe since World War II.

Last year, two large Ukraine recovery conferences were held in Lugano and Berlin.

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