According to the head of the Ministry of Finance, Sergii Marchenko, in order to win the criminal war waged by the Russian Federation against Ukraine, Ukrainians will probably have to reduce the level of consumption of goods and services several times.
What is known about the likely scenario of the need to reduce consumption by Ukrainians
Marchenko explained that Ukraine's economy must now also work to meet the country's military needs.
Unfortunately, we are still living in a rather specific reality where everything is going well, with macroeconomic and exchange rate stability. But this reality will need to be corrected if we really want to switch to a military mode, the head of the Ministry of Finance warned.
The Minister explained that Ukrainians need to reduce their consumption of goods and services by several times.
In particular, according to him, Ukrainians consume a large number of imported products, which has a negative impact on domestic producers.
Is society ready for this? I don't think it is ready at this stage. But this is a reality that could potentially exist. It could be other tax regimes, it could be other spending regimes. We have to prepare for this. And when we think about the 25th year, we have to lay down the appropriate scenarios, Marchenko warned.
What the IMF says
According to the Managing director of the International Monetary Fund, Kristalina Georgieva, in a comment to the journalists of the Financial Times, delays in additional financing of Ukraine from Western partners may lead to the disruption of all efforts for previous economic growth.
Georgieva noted that the Ukrainian authorities are currently able to survive a short-term pause in funding from Western partners for the next few months.
However, in the absence of agreements on additional financing, the Ministry of Finance of Ukraine will be forced to take austerity measures to cover the state budget financing gap.
According to one Western official, thanks to tranches from the IMF and the World Bank, Ukraine will be able to survive January and February.
Analysts point out that in case of further lack of additional financing, Ukraine will have to reduce expenses or switch to monetary financing from the National Bank of Ukraine (NBU).
However, this could lead to rapid hyperinflation and destabilise the entire financial system.
With the US and EU still negotiating funding packages for the country Ukraine's economic recovery would be at risk if it had to "adjust" to the lack of new financial support. Further delays could force Kyiv to revert to destabilising measures such as money printing, she said to the newspaper.
According to the IMF director, it is now very important to avoid significant delays in providing financial assistance to Ukraine.
The work in the US and Europe will continue. In the end, I remain optimistic that they will provide funding, Georgieva said.
The journalists noted that according to the budget for next year, Ukraine needs $41 billion in budget support from her allies.
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