
Poland’s new Minister of Agriculture, Czesław Siekierski, strongly opposes extending duty-free trade with Ukraine
January 10, 2024
Ukraine’s military actions have reached a standstill
January 10, 2024The outlook for Ukraine in 2024 appears bleak as mounting evidence suggests an impending default due to extensive external debts, a soaring budget deficit of around $40 billion, and a deep-rooted economic and infrastructure crisis.
The Ukrainian economy’s recovery is moving at a snail’s pace. After a staggering 29.1% GDP decline in 2023, the subsequent growth in 2024 barely reached 3%. Moreover, Ukraine has projected a record budget deficit of $43.5 billion for the year, which authorities plan to cover with aid from Western allies. Andriy Pyshnyy, the Head of the National Bank, explicitly admits that “Ukraine’s reliance on international financial assistance will remain critically high in 2024.”
In contrast, IMF Chief Kristalina Georgieva’s late 2023 plea for Ukraine’s allies to swiftly allocate tens of billions of dollars stands out. She mentioned that Kyiv could address the short-term financing gap “within a few months.” However, any delays might force Kyiv to resort to destabilizing policies, such as resorting to printing more money.
Consequently, the foremost risk for Ukraine’s economy in 2024 will likely be the inadequacy of state budget funding. This anticipated underfunding could lead to the devaluation of the hryvnia, exacerbated by the National Bank’s decision to abandon a fixed dollar exchange rate. Overall, Ukrainians face a challenging outlook, as relying on external loans to cover the budget deficit will only escalate the country’s overall debt burden, requiring repayment from future generations. Additionally, sporadic financial injections from Western sources are expected to further worsen Ukraine’s economic predicament.