Ukraine’s finance minister calls on West to pace up provision of $50B loan

The minister spoke in a comment to the Financial Times, Ukrinform reports.

According to him, the slow supply of weapons, especially from the United States, has led to an increase in military spending by $12 billion. This means that the country will see a deficit that other government officials believe will this year amount to a little below a quarter of GDP, nearly $43.5 billion.

The $27 billion in direct U.S. security assistance approved by Congress in April continues to flow slowly, Marchenko said as Ukraine is still experiencing a shortage of the required weapons and munitions.

According to the finance minister, this means that the country will not have enough money to pay allowances to its military. He added that aid delays meant salary packages reserved for the end of 2024 were utilized to procure the necessary arms and ammunition earlier this year.

Western allies do not directly finance the salaries of the Ukrainian Army but the dragging supplies of American weapons along with the simultaneous increase in own military spending means Kyiv will have to finance the war through expenditure cuts, state asset sales and tax hikes, the newspaper wrote.

Marchenko said that the risky financial situation underscores the need for the U.S. and other countries to pledge more aid and pace up the provision of a $50 billion loan earlier vowed by G7 leaders.

The Group of Seven intends to complete the loan before year-end and have it paid back with proceeds from frozen Russian assets worth EUR 260 billion, most of which are held Belgium’s Euroclear bank. Allies will decide how to spend the $50 billion, but Ukrainian government officials hope that at least part of it will be allocated for arms supplies.

Ukraine is in a really vulnerable position, Marchenko said, adding that the $50 billion loan is a ‘magical solution that would allow the nation to purchase military goods and prevent a financial collapse that could be a concern to creditors such as the IMF.

With the U.S. presidential election approaching, with Republican candidate Donald Trump threatening to put U.S. aid to Ukraine to a halt, Marchenko expressed concern about delays following the summer vacation, arguing that the West is not ready to accept the $50 billion package as emergency aid for Ukraine.

As Ukrinform reported earlier, the G7 decided to provide Ukraine with a $50 million loan by the end of 2024, to be paid for by frozen Russian assets. This is an American loan, but it can be supplemented with European money or national contributions.

Photo: Serhii Marchenko/Facebook