Ukraine Finance Minister forecasts 45% GDP drop, committed to servicing debt

An aerial view shows a tractor spreading fertiliser on a wheat field near the village of Yakovlivka after it was hit by an aerial bombardment outside Kharkiv, as Russia’s attack on Ukraine continues, April 5, 2022. REUTERS/Thomas Peter

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LONDON, May 11 (Reuters) – Ukraine’s economy is expected to contract by 45% this year, the country’s Finance Minister Serhiy Marchenko said on Wednesday, adding his government was committed to servicing its debt in full.

Ukraine expects a bigger economic decline in 2022 than both European Bank for Reconstruction and Development (EBRD) and the International Monetary Fund, which have projected the country’s economy to shrink by 30% to 35% amid Russia’s invasion.

“People of Ukraine are paying an enormous price, and this price cannot be assessed,” Marchenko said during a briefing at the annual meeting of the EBRD in Marrakech, Morocco.

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“What can be assessed is the projection of GDP decline, we are around 45% this year,” he added, speaking by video link.

The country has continued to service its international bonds since Russia’s invasion on Feb. 24. The country is due to pay $1 billion due on a dollar bond on Sept. 1 and is facing a $5 billion fiscal gap on a monthly basis due to the war.

Marchenko added that Ukraine needs to find additional sources to finance this gap, because the country can only cover “62% of our primary budget needs” without including military expenditure.

“We have already raised over $2.2 billion in war bonds,” Marchenko added. “Military bonds are (an) important investment to support state budget in war times.”

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Reporting by Karin Strohecker and Jorgelina do Rosario, editing by Saikat Chatterjee and Toby Chopra

Our Standards: The Thomson Reuters Trust Principles.

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