Ukraine’s finance minister says reconstruction costs are rising Reuters

© Reuters. In the town of Vyshhorod near Kyiv, Ukraine, on November 24, 2022, local residents took things from residential buildings destroyed by Russian missile strikes as Russia continued to attack Ukraine. REUTERS/Gleb Garanich

mark jones

LONDON (Reuters) – Ukraine’s Finance Minister Serhiy Marchenko said more Western support was needed to help it cover mounting reconstruction costs after Russian missile attacks escalated this week.

In recent days, Russian lightning strikes have caused Kyiv to suffer the largest power outage in the nine-month war and shut down all of Ukraine’s nuclear power plants for the first time in 40 years.

In August, the World Bank estimated that $105 billion was needed to repair Ukraine’s physical infrastructure, but Marchenko told Reuters that figure was rising.

“Unfortunately, this number is growing every day, and at worst significantly,” he said in emailed comments.

Marchenko added that current Western support means “we’re going to get about $3-3.5 billion a month, compared to $5 billion this year,” which should be enough to keep the government afloat.

However, he said there was little reconstruction cost in the current budget and would need to be increased if possible.

Some senior European officials estimate the cost of rebuilding post-war Ukraine, which entered its tenth month on Thursday, could exceed 1 trillion euros.

For now, though, Western support continues to pour in.

The US approved $400 million in military aid this week. G7 foreign ministers will discuss securing Ukraine’s energy supplies next week, German Foreign Minister Berberk said on Twitter on Thursday.

The IMF said on Wednesday it had reached an interim “staff-level” agreement on policy program monitoring arrangements. Ukraine hopes the move will lead to a comprehensive support package worth tens of billions of dollars.

“The support of our international partners is crucial for us,” Marchenko said, citing the 18 billion euro ($18.73 billion) pledge by the European Union.

debt measures

Ukraine had applied to the International Monetary Fund for a $1.5-20 billion program this year, but the fund’s debt sustainability requirements prevented it from approving it. Instead, a $1.3 billion emergency deal was reached under the IMF’s new food and energy crisis programme.

The IMF is temporarily unable to predict Ukraine’s economic capacity or reconstruction needs, or how much debt financing it can afford.

Marchenko won a two-year freeze on debt payments from the country’s international creditors, including Western governments and major investment firms, in August.

Ukraine “remains in a completely unpredictable situation,” he said, although it still plans to remove some of the capital controls imposed to stabilize its finances.

That means starting in April, bond investors who were unable to access funds during the war will again receive some payments, despite Marchenko urging them to reinvest that cash back into Ukraine by buying long-term bonds.

“We are counting on this channel to be the first to bring private capital back home,” he said.

($1 = 0.9609 EUR)

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