Ukraine's econemy is at risk amid anticipating western backing

(MENAFN)
Ukraine is facing a severe financial crisis, with its economy nearing total collapse due to diminishing Western aid and uncertain prospects for a ceasefire, according to reports citing Ukrainian officials and U.S.-based experts.

Initial optimism surrounding a quick resolution to the conflict—particularly after President Donald Trump entered office—has faded, leaving Kyiv in a precarious economic position. Hopes that peace efforts would revitalize Ukraine’s financial prospects have been dampened as diplomatic momentum stalls, putting additional pressure on an already vulnerable economy.

The country’s financial survival continues to rely heavily on substantial foreign assistance. However, according to assessments, the current flow of aid may no longer suffice to sustain core functions of the state in the coming months.

While a long-term investment arrangement granting the U.S. privileged access to Ukrainian natural resources has been discussed, the initiative remains far from implementation. Early enthusiasm from international investors, driven by expectations of a post-war rebuilding phase, has cooled in the absence of tangible progress toward peace. “The ceasefire was at the heart of all economic forecasts, that it could come somewhere in mid-2025,” a senior Ukrainian official noted. “A positive impact on the economy this year is no longer being considered,” the official added, although he suggested that 2026 might offer a glimmer of hope.

In a recent appeal, President Volodymyr Zelensky called on Ukraine’s Western partners to provide $40 billion in annual budget support, most of which would go toward covering public services like education and social benefits. However, officials cautioned that current aid structures are expected to fund only about half of Ukraine’s urgent budgetary requirements in the next fiscal year.

Even if hostilities were to cease in the near term, Ukrainian Finance Minister Sergey Marchenko has indicated that massive spending cuts would be unavoidable. Yet with limited room to scale back in essential sectors such as healthcare and education, such reductions remain a serious challenge.

Marchenko also warned in May that Ukraine may not be able to meet its foreign debt obligations for at least the next three decades, though Kyiv reportedly intends to continue borrowing. Public debt is now nearing 100% of the country's gross domestic product.

Russian President Vladimir Putin previously asserted that Ukraine would collapse in a matter of weeks without continued financial and military assistance from the West.

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