… če zahodne države ne bodo odobrile finančne pomoči, in to takoj…

The financial pressures facing Ukraine are immense — and relentless. The government uses all of its tax revenues to cover defence spending — amounting to about half of its public expenditure. While Ukraine has received nearly $100bn worth of weapons and military training, it also needs foreign aid to pay for the government, public services, pensions and benefits. This requires $41bn in external financing next year, according to the budget passed by parliament last month.

It was counting on $18bn from the EU, $8.5bn from the US, $5.4bn from the IMF, $1.5bn from other development banks and $1bn from the UK. Kyiv is still negotiating with other partners, such as Japan and Canada.

Although some of the required money will be paid whatever happens in Washington or Brussels, Kyiv needs cash to start flowing next month. If it fails to come through and Kyiv cannot borrow enough domestically, it may have to resort to monetary financing by the central bank, which could unleash hyperinflation and put financial stability at risk.

Hence its alarm at the impasse in the EU and US. In Brussels, Hungary has vowed to block all support lines in part as leverage to force the EU to release cash payments to Budapest frozen due to rule of law violations.

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The next seven days could be critical for Ukraine’s future. On Sunday, the IMF is expected to release its latest update on the country, shedding light on its fiscal position and its potential funding needs.

That, some hope, will provide a stark reminder of the stakes to officials on both sides of the Atlantic and catalyse a fresh push for deals.

EU diplomats will be locked in talks all day Sunday and throughout next week in a bid to strike a deal on a financial package. White House officials and senior Democrats are still holding out hope for a deal on Ukraine funding, but their fears and warnings about the impact of a possible lapse have grown increasingly strident. They are not just worried about the immediate impact on Ukraine, but about what the failure to aid Kyiv will tell the world about US leadership.

“We know from intelligence community assessments that Putin believes Ukraine will fall within just months without renewed US support,” Mark Warner, the chair of the Senate intelligence committee, said this week. “Why, at this moment in time, would we prove Putin right?”

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“This is crunch time . . . an unfortunate aligning of the fiscal stars,” says Kirkegaard.

“All the times that western policymakers have come to Kyiv and said, ‘We stand with you for as long as it takes’ — I mean, it all sounds kind of hollow right now, right?”

Vir: Financial Times