The high cost of war: Ukraine's $100 million daily battle
As Ukraine grapples with the relentless and costly war with Russia, the outgoing Ukrainian Defense Minister reveals that the nation is bearing an astronomical daily financial burden of $100 million.
Outgoing Ukrainian Defense Minister Oleksii Reznikov stated that Ukraine is bearing daily costs of $100 million due to the war with Russia, adding that the assistance provided by volunteers since February 2022 has only accounted for 3% of the total funds used.
Reznikov pointed out that when one compares the funds raised by various volunteer foundations and the state's daily spending of $100 million, it becomes apparent how significant the financial burden of the war is. Prime Minister Denys Shmyhal previously stated that Ukraine was using 100% of its tax income for military needs, and aid from donors and allies was also being directed toward the defense sector.
"A day of war costs us $100 million. Now take the budgets of all the respectable large volunteer foundations and see how much they raise. And take the state, which spends $100 million per day in general. Just think about it," Reznikov said, as quoted by the Ukrinform news agency.
This comes just one day after President Volodymyr Zelensky announced that Defense Minister Oleksii Reznikov had been sacked from his position.
Rustem Umerov, a Crimean Tatar, would be replacing Reznikov, Zelensky also announced. Umerov has been the head of Ukraine's State Property Fund since September 2022 and has been a main driver in some major war negotiations like the Black Sea grain deal.
A few days ago, Zelensky's alleged anti-corruption campaign fueled rumors that he may fire Ukraine's Defense Minister following allegations of misconduct in the procurement of military supplies.
Ukraine's economic struggles intensify as 2023 budget reveals staggering deficit
Ukraine is grappling with a severe fiscal challenge as it faces a substantial budget deficit in its 2023 financial plan. The deficit is estimated at a staggering 1.296 trillion hryvnias, equivalent to approximately $35.1 billion. The draft budget for the year outlines expected revenues of 1.28 trillion hryvnias against expenses totaling 2.57 trillion hryvnias, resulting in a monthly budget deficit of around $3 billion. To bridge this financial gap, Ukraine intends to rely on foreign loans.
This financial strain is not new for Ukraine, as it has been confronting consistent monthly budget deficits of approximately $5 billion since the commencement of the military conflict. A significant portion of these deficits has been covered through foreign loans and grants, with the bulk of these funds being allocated to meet the nation's pressing military needs. Meanwhile, the Ukrainian Finance Ministry reported a substantial increase in the country's state debt, with a staggering $4 billion added in just the month of July. This pushed the total state debt to surpass an alarming $132 billion.
Moreover, the outlook for the following year, 2024, suggests that Ukraine may continue to grapple with a budget deficit at a similar level to that of the current year, as indicated by the Ukrainian Finance Ministry.