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Ukraine war: Zelensky to meet Biden as Kyiv running out of options to finance its fight against Russia

  • Ukraine’s financial lifeline is at stake, and Kyiv is trying to work out how they can fund the war effort if its allies fail to come through with promised aid
  • Currently, US Congressional Republicans are holding up more than US$60 billion in funds and the EU’s US$53.9 billion is being blocked by Hungary

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Ukrainian President Volodymyr Zelensky (right) will meet US President Joe Biden in a bid to convince US lawmakers for more aid in their fight against Russia. Photo: Ukrainian Presidency/dpa

Policymakers in Kyiv are trying to work out how they can fund Ukraine’s war effort if its allies fail to come through with promised aid. The options are fraught with risk.

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The financial toolkit includes raising tax revenue, an obvious challenge in a battered economy, or cutting spending for an already beleaguered public. Monetary-policy options are devaluing the Ukrainian currency or returning to the central bank’s taps, a move Finance Minister Serhiy Marchenko told Bloomberg would have “negative consequences.”

President Volodymyr Zelensky is in Washington to make an urgent appeal to US Congressional Republicans who are holding up more than US$60 billion proposed by President Joe Biden. The European Union’s €50 billion (US$53.9 billion) package meanwhile is being blocked by Hungarian Prime Minister Viktor Orban as part of a broader fight over the bloc’s budget.

At stake is Ukraine’s financial lifeline after Kyiv’s counteroffensive failed to deliver gains and the second full winter since the Russian invasion brings new hardships. Zelensky’s chief of staff, who met US officials last week, said a halt to financing raises the spectre of handing Vladimir Putin a victory that would change the map of Europe.

On Monday, Moscow said it will “very attentively” watch the Zelensky-Biden meeting.

Kremlin spokesman Dmitry Peskov said that “tens of billions of dollars” already provided by Washington to Kyiv had failed to turn the tide of war and further aid would similarly fail to do so, adding that Zelensky’s authority was being undermined by the failures.

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“The support from the EU and US is crucial,” Marchenko told Bloomberg last week. “Ukraine is maintaining active communication with the representatives of the EU and US, informing them about our needs for the next budget year.”

If the shortage of foreign aid inflows becomes larger than several billion US dollars, the authorities will only have unpleasant options to choose from
Olena Bilan, economist
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