According to its own statements, the Ukrainian government lacks around five billion euros a month to finance the state-owned enterprise. Several industrialized countries want to step in – including Germany.
Germany wants to support Ukraine with short-term budget support of around one billion euros. Finance Minister Christian Lindner (FDP) announced this at the meeting of G7 finance ministers on Petersberg near Bonn.
The money should help to close the liquidity gap in the war-torn country. In the group of large industrialized countries and together with international institutions, efforts are being made to continue financing the state functions of Ukraine.
Lindner also wanted to appeal to the other G7 finance ministers for help for Ukraine. Several countries have already made corresponding announcements, he said. The US had pledged to mobilize $7.5 billion. The G7 also includes the UK, France, Italy, Japan and Canada. The package should be finalized at the latest at the meeting of the G7 heads of government in June at Schloss Elmau.
5 billion euros per month
According to the Ministry of Finance, Ukraine has asked for aid of around 5 billion euros for three months. After this time, however, further support may be needed. Ukraine needs the money, for example, to pay pensions and the salaries of state employees.
The German billion is intended as a grant, not as a loan, said Lindner. The money is to be paid from the 2022 budget without having to take on additional debt. Lindner has planned a kind of crisis buffer in his budget, from which around one billion is now to be rebooked as liquidity aid for Ukraine. The budget committee of the Bundestag puts the finishing touches on the budget for the current year on Friday night and could still incorporate the change.
Credit from the KfW
At the beginning of the week it was also announced that Ukraine is to receive another loan of 150 million euros from the state development bank KfW. The money should be used to support citizens and to rebuild infrastructure, said Ukrainian Prime Minister Denys Schmyhal. At the beginning of April, Ukraine had already received 150 million euros from KfW as the last tranche of a loan from the federal government totaling 500 million euros from 2015.
The new loan has a term of 15 years and repayments would only have to start after 5 years, Schmyhal said. Overall, Ukraine has received financial support of more than five billion dollars (currently around 4.8 billion euros) since the Russian invasion on February 24.