Finance Minister Marchenko warned of Ukraine’s most difficult budget situation since the start of the war ahead of a "very difficult winter" - media
Kyiv • UNN
The Finance Minister forecasts a budget deficit of up to $32.6 billion and a possible postponement of non-military payments. He called on the EU to use Russian assets.
Ukraine’s Finance Minister Serhii Marchenko warned of possible liquidity problems in the state budget and delays in some non-military payments due to rising defense spending. He also called on EU countries to consider a new Ukrainian plan for using frozen Russian assets. Marchenko made the statement in an interview with Euronews, UNN writes.
Details
Ukraine’s finance minister warned that the country may have to cut non-military spending if it is unable to secure funding from its allies. He urged European ministers to "think outside the box" as Kyiv prepares for another winter of Russian escalation.
Serhii Marchenko, who has been responsible for the country’s finances since 2020, told Euronews that Ukraine had not faced such a difficult budgetary situation since the start of the full-scale invasion in 2022.
Because of the focus on military spending and weapons procurement, other budget items may suffer, and payments may be delayed if a solution is not found.
We are already seeing some liquidity problems and anticipating a certain shortfall of funds in our budget. This means that due to the lack of liquidity, we may have to postpone some payments unrelated to the war. The consequences will be
Asked whether this could affect external creditors, Marchenko answered that it would not.
At the same time, he said, the consequences may be felt at the local level, particularly with regard to the construction of shelters and infrastructure, which he called "still important," as the country prepares for another winter of Russian attacks.
"We have not faced such a situation since 2022; back then, we really suffered greatly from a lack of liquidity. Now we are again dangerously approaching the same scenario we faced in 2022."
He also reported that the intensity of Russian attacks on Ukraine increased sharply in August. Marchenko said he was working on a new budget based on the assumption that the war would continue into 2027. In his assessment, a funding gap of $32.6 billion would need to be covered. According to him, the IMF, whose representatives visited Kyiv this week, cites similar figures.
The war has escalated very rapidly. We are fully aware of this ourselves. Compared with last month, it is a completely different reality, given the recent attacks on our logistics. We expect a very difficult winter. Escalation means that we need to find the resources to get through it
"Think outside the box"
Ukraine’s finance minister urged European ministers to take a creative approach to finding solutions and consider a new Ukrainian plan to use approximately $300 billion in frozen Russian assets.
Last December, the plan was rejected by EU ministers, who were unable to overcome differences among the member states. Instead, they decided on joint financing for a €90 billion loan.
Last week, a group of EU countries led by Sweden revived the proposal, arguing that the costs of the war effort should be fairly distributed among European taxpayers. Since President Donald Trump took office, the EU has largely been left alone to finance this support.
Marchenko welcomed the move and said he hoped more countries would join the initiative by the scheduled September meeting of eurozone finance ministers.
According to him, the new Ukrainian plan, which provides for the transfer of responsibility for the assets currently held in Belgium, contains "entirely new elements" intended to reduce the legal risks for the Belgian government and Euroclear, where the assets are held.
"We want to discuss this; the plan creates new conditions under which Belgium will not be responsible for legal disputes with Russia, but this will be the shared responsibility of all 27 countries."
However, Ukraine and its allies supporting the plan, including neighboring Poland, Sweden, the Netherlands, and Spain, are facing significant difficulties in trying to revive the idea.
Last December, amid serious concerns from the European Central Bank and strong resistance from key member states — Italy and France — the EU postponed lengthy negotiations on the use of frozen assets.
The reasons cited included concerns about possible retaliatory measures by Russia, reputational damage to the eurozone, and lengthy legal disputes related to possible lawsuits by Moscow over the confiscation of assets.