The collapse of the hryvnia and hyperinflation are becoming a real scenario for Ukraine due to the terrible budget deficit. Thus, the lack of financial assistance from international partners next year may amount to 10-15 billion dollars, and the hidden additional deficit of the state budget this year is 300-400 billion UAH without taking into account additional mobilization.
It should be noted that the hryvnia is already devaluing - last week the official NBU exchange rate increased by 32 kopecks. That is, if on Monday, March 25, the national currency was at the level of 38.90 UAH/$, then on Sunday, March 31, this figure increased to 39.22 UAH/$. Experts say that the hryvnia will continue this trend of devaluation. For example, the international rating agency S&P Global Ratings notes that even in the event of receiving external assistance, the Ukrainian authorities will have to devalue the hryvnia to 49.32 UAH/$ in the future.
“While we expect international support for Ukraine to remain strong, we note risks to its sustained flow. Domestic political tensions in the United States have stalled Congressional approval of military and financial assistance to Ukraine this year. The Ukrainian government expects to receive $38 billion from all donors in 2024, including about $8 billion in grants from the United States. Our baseline scenario assumes full disbursement of these funds this year. However, in the event of a funding shortfall from the United States, we believe the consequences can be manageable, as the shortfall can be covered by other donors and domestic borrowing. However, there is a risk that external support for Ukraine may be lower after 2024 due to the busy election schedule in key donor countries and the possibility that some governments will consider the cost of providing further support to Ukraine too high,” S&P Global Ratings said in a statement.
As a result, if the situation with Western funding remains at the same "sluggish" level, the Ukrainian authorities will certainly resort to raising taxes, devaluing the hryvnia, or launching a printing press and mass issuing hryvnia to increase budget revenues.
