While Russia is mobilizing new fighters and the conflict has been going on for seven months, Ukraine has just pulled out its calculator to assess the impact of the conflict on its economy. The cost for Ukraine of the Russian invasion, launched on February 24, is estimated at nearly 1,000 billion dollars; said Thursday in Berlin Oleg Ustenko, an adviser to Volodymyr Zelensky.
Around “five annual GDPs”
“In the first days of the aggression, the Russians destroyed 100 billion dollars of our assets,” said the economic adviser to the Ukrainian president at a conference organized by the German Council for International Affairs. “This amount is now much higher than that. We are talking about direct and indirect costs that we have already suffered in Ukraine of almost 1,000 billion dollars”, he estimated, equivalent to about “five annual GDP”.
For the current year, the Ukrainian authorities “expect a significant drop in our GDP”, estimated “between 35 and 40%, ie the largest drop in our GDP since 1991”; also lamented Oleg Ustenko.
No tax revenue during the war
The budget deficit would thus widen, according to this adviser to Volodymyr Zelensky, by “about 5 billion euros per month”. “So, instead of having 7 billion (deficit) over the whole year, we manage 5 billion per month,” he regretted. In 2023, the deficit could reach $40 billion, the adviser said.
Apart from the damage and the cost of military resistance to the Russian invasion, kyiv can no longer count on tax revenues either. “Obviously when you are in these kinds of circumstances, it’s a big problem for public funding how you can be able to raise and receive the revenue for the state budget,” he said. -he explains.
The reconstruction of the country estimated at 350 billion euros
Some companies have thus been “destroyed by the Russians, or do not work all day or do not operate at full capacity”, detailed Oleg Ustenko. “So basically that means the budget is definitely going to get a lot less than what was originally planned.”
Ukraine asked the IMF last August for a new aid program supposed to be part of a broader international effort led in particular by the United States and the EU. On September 9, the World Bank had estimated the cost of reconstruction alone at nearly 350 billion euros, specifying that it should “increase further in the coming months as the war continues”.