Ukrainian economy loses $2–3 b monthly due to threat of invasion

22 February 2022, 05:24 AM

The looming Russian invasion has spooked investors and is prompting capital flight, causing Ukraine’s economy to lose $2–3 billion every month, a Ukrainian official has said in an interview with the business outlet RBC-Ukraine on Feb. 21.

“Deputy Chief-of-Staff of the Office of the President of Ukraine Rostyslav Shurma said the looming invasion fears have (led to) halted investment, additional inflationary pressure, tourism losses, and shrinking air travel.”

Shurma also said speculation-induced financial market pressure has blocked government borrowing, which has been reflected in the Ukrainian hryvnia’s dropping exchange rate. According to his estimation, all these factors contribute to the Ukrainian economy losing billions every month.

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The government would need $4-5 billion in funds to continue financing its various programs, Shurma said.

“$2-3 billion in economic losses; (this is) essentially how much we lose every month,” he said.

“(We need) A cushion of $4-5 billion to adequately sustain development.”

The official noted that the ongoing crisis has effectively cut off Ukraine from foreign borrowing.

Should the situation settle down, even at current levels of tension, economic losses will shrink, and investors will adapt a higher “pain threshold,” he said.

According to a study by the Center for Business and Economic Research, Ukraine’s economy has lost $280 billion since 2014 due to Russian aggression in the Donbas and the illegal occupation of Crimea.

The U.S. ambassador to the OSCE, Michael Carpenter, said on Feb. 21 thatRussia has arrayed between 169,000 and 190,000 troops on the Russian-Ukrainian and Belarusian-Ukrainian border, and in the temporarily occupied territories of Crimea and the Donbas.

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