Ukraine needs additional $5 billion a month, says lawmaker

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The head of a parliamentary finance committee said Kiev faces austerity without additional foreign aid

Ukraine’s government needs an additional $5 billion each month to avoid hefty budget cuts, said a senior lawmaker, calling for more aid from abroad, despite billions in aid already provided by the United States and European allies.

The head of the Kyiv Parliamentary Committee on Finance, Taxation and Customs Policy, Danylo Hetmantsev, spoke on Tuesday about the looming shortcomings in comments to the local media and emphasized the mounting economic problems associated with the ongoing conflict with Russia.

“We need to borrow $5 billion a month. If we don’t get it, we’re going to have to cut spending.” he said. “We have no potential in the economy to raise taxes. We cannot do without the help of our partners as long as the fighting continues.”

The government collected about $3.4 billion in taxes last month but spent more than $8.4 billion over the same period, the official added.

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While Hetmantsev noted that Ukraine had received loans and grants from the US and some allies in Europe — finance ministry data showing the country received more than $5.1 billion in direct economic aid between January and May — said that this amount was not sufficient to cover the widening budget gap.

Late last month, the Group of Seven (G7) countries agreed to send an additional $19.8 billion in aid to Kiev, coinciding with a massive $40 billion aid package from Washington, though a significant portion of the latter was spent. of weapons and other military equipment.

The war in Ukraine has taken a major toll on its economy, with the World Bank forecasting a staggering 45% contraction by 2022. The fighting has also pushed global food prices soaring, with both Ukraine and Russia accounting for about 40% of wheat. exports in Eastern Europe, while retaliatory sanctions against Moscow have contributed to rising energy costs around the world.

As head of both Kiev’s finance committee and National Recovery Council, Hetmantsev has faced fierce opposition from Ukrainian companies and the wider public, with thousands signing a petition demanding his resignation in May. In an open letter accompanying the petition, the official was criticized for supporting recent tax hikes and alleging the increases had discouraged investment in Ukraine.

However, Hetmantsev refused to leave his positions, because he considered the criticism “myths” and insisting that the government had taken the right approach.

“I don’t want to shock you, but every state wants to collect as much tax as possible. Demand is in the golden mean and equilibrium,” he said, adding that “we managed to find, still manage to find and hopefully will be able to find [this balance] in the future.”

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