KYIV, Ukraine — Ukraine’s hard-won economic stability is under threat again as the government faces a large budget hole and its two biggest allies and sponsors — the United States and the European Union — have so far failed to decide on extending more aid.
Without pledges of support by the start of February — when EU leaders meet to decide on aid — and if no money arrives by March, that could risk the progress Ukraine has made against inflation. It has helped ordinary people keep paying rent, put food on the table and resist Russia’s efforts to break their society’s spirit.
The issue was on the minds of U.S. Secretary of State Anthony Blinken and Ukrainian President Volodymyr Zelenskyy when they met at the World Economic Forum in Davos, Switzerland on Tuesday.
“We’re determined to sustain our support” for Ukraine, Blinken said, “we’re working very closely with Congress in order to do that. I know our European colleagues are doing the same thing.”
Here are key things to know about Ukraine’s economy and why funding from allies is crucial:
HOW IS UKRAINE’S ECONOMY DOING?
The International Monetary Fund has said Ukraine’s economy has showed ” remarkable resilience.” The first months of the war in 2022 saw the country lose a third of its economic output to occupation and destruction because Russia controls the heartland of Ukraine’s heavy industry.
Ursula von der Leyen, president of the European Commission, left, and Volodymyr Zelenskyy, Ukraine’s president, center, during the ‘CEOs for Ukraine’ session on the opening day of the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, Jan. 16, 2024. The annual Davos gathering of political leaders, top executives and celebrities runs from January 15 to 19. Credit: AP/Stefan Wermuth
Inflation also soared to a whopping 26% because the central bank had to print money to cover yawning budget gaps.
However, things rebounded last year, with inflation falling to 5.7% and the economy growing 4.9% — more…
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