World Bank says Ukraine has a tenfold increase in poverty due to war

 Russia's attack on civil infrastructure in Ukrainian cities far from the frontlines will complicate the already dire economic situation in the country. This is despite the fact that the country has seen a tenfold rise in poverty in the past year, a senior World Bank official stated on Saturday.

Arup Banerji (World Bank regional country director of Eastern Europe), said that Ukraine's quick restoration of power following this week's large-scale Russian attacks on energy infrastructures reflected the efficiency and wartime system. However, Russia's shifts in tactics have raised risks.

In an interview with Reuters, he stated that "if this continues, then the outlook will be much, much more difficult." In an interview with Reuters, he said that winter is approaching and houses need to be repaired by December or January. If the houses aren't fixed, there could be another wave of internal displacement. Volodymyr Zelensky, the Ukrainian President, stated this week to international donors that Ukraine required approximately $55 billion - $38billion to cover its estimated budget deficit for next year and an additional $17billion to begin rebuilding critical infrastructures such as schools and energy facilities.

Officials in Ukraine stressed the need for predictable and ongoing financial assistance in order to maintain government operations and start critical repairs.

Banerji said that the response to Zelenskiy’s call - which was made during the annual meetings at the International Monetary Fund (and World Bank) - and other meetings held in the past week were encouraging.

He said that most countries had indicated they would support Ukraine financially in the coming year. He said that 25 per cent of the population will be in poverty by next year's end, an increase of just over 2% from before the war. The number could reach 55% by next year.

Banerji stated that the unanimous selection of Serhiy Marchenko, Ukraine's Finance Minister, as the next rotating Chair of the Boards of Governors in 2023 was a testimony to the country's strong support.

IMF Director Kristalina Georgieva said this week that Ukraine's international partners had already pledged $35 billion in loan and grant financing to Ukraine in 2022. However, its financing needs will remain "very large" for 2023.

"IMF staff will meet in Vienna next week with Ukrainian authorities to discuss Ukraine’s budget plans and a brand new IMF monitoring tool, which should open the door for a full-fledged IMF programme once conditions permit," Georgieva stated.

Banerji stated that Ukraine had already reduced its budget to the bare minimum. Funds will be used to pay salaries, pensions, and military expenses, and to service domestic debt.

The budget only included $700 million in capital expenditures. This is a small fraction of the $349 Billion reconstruction costs that the World Bank recently estimated.

He said that if Ukraine fails to receive sufficient support, it would have to either print more money, at a time when inflation is already low or cut its social spending

Share this article: