Ukraine's Deficit Grows While Intergovernmental Aid Stagnates

Ukrainian President Volodymyr Zelensky has been holding a string of bilateral meetings with European leaders to showcase what has been dubbed the Ukraine victory plan. The so far undisclosed plan maps out a potential path to creating "the right conditions for a just end to the war" against Russia, according to the Ukrainian head of state. Zelensky met with Prime Minister Keir Starmer of the United Kingdom and new NATO Secretary-General Mark Rutte in London yesterday, before continuing to meetings with French President Emmanuel Macron and Italian Prime Minister Giorgia Meloni in the evening. Today, he is in Rome meeting the Pope and also jetted to Berlin for talks with German chancellor, Olaf Scholz.

While the details of the plan are not known, it will likely involve the need for more money from Ukraine's foreign donors, who are mostly located in Europe with the exception of the governments of the United States, Canada and Japan. U.S. President Joe Biden - Zelensky's biggest donor - postponed a meeting with him in Europe due to Hurricane Milton.

Data from the Ukrainian government analyzed by the European Parliament shows that while Ukraine's expenses have been growing larger in the course of the war, donations by foreign governments and international organizations and institutions have decreased slightly in 2023 compared with 2022 - by 10 percent to around 10.5 billion dollars. Meanwhile Ukraine's non-tax revenue patched some holes in the country's financing. It consists, among others, of charitable contributions from sources other than foreign governments and entities as well as a large payout from Ukraine's Central Bank in 2023. While tax revenue's took a understandable hit in 2022, the year of Russia's invasion, it has since risen once more above 2021 levels as the economy was adjusting and taxes rose to pay for the war effort, but also simply due to inflation. The Ukrainian parliament yesterday also increased the war-time tax of 1.5 percent to 5 percent, the biggest tax hike since the start of the conflict. Taxes on the profits of banks and other financial institutions also rose retroactively from the beginning of the year.