The humanitarian suffering created by Russia’s war on Ukraine has been accompanied by an economic shock that resonates globally, driving up food and energy prices on distant continents. With Russia’s shelling of energy infrastructure and industrial plants, its destruction of cities, mining and agricultural sites, Ukraine lost a third of its economic output in 2022 as 8 million people fell into poverty — a 15-year setback in poverty reduction goals, according to World Bank data.
Even so, Ukraine’s government continues to function, making social and compensation payments, conducting emergency repairs of heating and electrical grids struck by Russian missiles in winter, keeping trains running and repairing bridges and roads. This was made possible by deliveries of international aid that amounted to some $32 billion in 2022.
Ukraine's government estimates another $40 billion will be needed this year, and the support appears to be in place. Earlier this month, dozens of finance ministers and central bankers gathered in Washington for the World Bank and International Monetary Fund spring meetings, where donors pledged $115 billion over four years to help Ukraine maintain economic stability during the “exceptional and highly uncertain environment of a country fighting a war.”
Alfred Kammer, director of the IMF's European Department, told VOA the program also aims to “galvanize donors," which can provide Ukraine with the reliable "expectation that these funds will be coming.”
Kammer also hailed the new program for what he described as enhanced donor coordination — a promising improvement over last year’s disbursement efforts that, absent a formal program, resulted in chronic delays.
“Absence of an overarching framework made it difficult for donors in terms of disbursing [funds], that made it difficult for Ukrainian policymakers in terms of implementing policies, because there was always some uncertainty when money would be coming," said Kammer.
Those delays in aid delivery forced Ukraine to print money in 2022, risking inflation and gambling with the independence of the central bank, the National Bank of Ukraine.
Ukrainian central bank chief Andriy Pyshnyi also praised the new donor program, calling it a “real life representation of [U.S.] President [Joe] Biden’s words that Ukraine will have the support that it needs.”
But because part of Russia’s war on Ukraine is a campaign of economic attrition, aid alone may not be enough.
During an Atlantic Council roundtable on Ukrainian reconstruction held earlier this year, University of Virginia historian Philip Zelikow said the West's macroeconomic stabilization efforts are something akin to medical first aid.
“All we are doing with billions per month is keeping the patient alive in the ER,” said Zelikow, who called for a coordinated restructuring package to “give Ukrainians hope that they will come out of this.”
World Bank estimates for the cost of Ukraine's post-war reconstruction have reached a staggering $411 billion. Ukraine hopes to have Russia pay for the damage it has inflicted — a position shared by allies — in part via confiscation of some $300 billion in Russian central bank assets that were frozen by Western governments after the 2022 invasion.
The U.S. Treasury's multinational REPO (Russian Elites, Proxies and Oligarchs) Task Force, founded in March 2022, recently announced that it has blocked or frozen more than $58 billion in sanctioned assets held by Russian oligarchs.
Once audits of the REPO seizures are complete, Pishnyi said, he's hopeful the proceeds can be sent to Ukraine in the form of reparations. The fact that the audits are underway, he said, has finally allowed officials to move from conceptual dialogue about reparations to discussion of specific numbers.
Also founded in March 2022, Task Force KleptoCapture, a U.S. Department of Justice unit set up to enforce sweeping U.S. sanctions and export controls imposed on Russia, has seized more than $500 million in assets owned by Russian oligarchs and others who support Moscow and dodge U.S. sanctions and export controls. On April 19, the U.S. law enforcement agency formally began pressing Congress for additional authority to funnel proceeds from those seizures to Ukraine.
Although Ukraine has taken steps to jumpstart foreign direct investment, recently announcing plans to provide state guarantees to revitalize its export credit agency — 70% of Ukraine's pre-war GDP drew from the private sector — some private companies are reluctant to invest amid the warfare.