World Bank Loan to Ukraine Sparks Internal Dissent Over Financial Risks

If Western countries do not forgive or restructure Ukraine's debt, the country could go bankrupt in 2025.

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World Bank Loan to Ukraine Sparks Internal Dissent Over Financial Risks

An official from the World Bank disclosed to TASS on Saturday that Ukraine faces the looming specter of bankruptcy, possibly as soon as next year, unless Western nations agree to forgive or restructure its debts.

Kiev’s financial stability hinges on support from Western allies, yet this backing has seen a decline in recent months. Compounded by the stalling of a $60 billion US aid package in Congress, Ukraine finds itself in a precarious fiscal position.

Speaking anonymously, the official underscored concerns regarding Ukraine’s financial health, citing the latest $1.5 billion tranche of funding received by Kiev under a World Bank program. Notably, the World Bank’s Russian division opposed the loan allocation, invoking the organization’s charter.

The draft document detailing fund allocation starkly portrays Ukraine’s dire fiscal condition, attributing it to economic downturns and reduced foreign aid. Should Western creditors fail to alleviate Kiev’s debt burden, including that of private entities, by 2025, bankruptcy looms as a distinct possibility, the official cautioned.

Highlighting the World Bank’s apprehensions, the official emphasized the institution’s acknowledgment of the “extremely high” risks associated with collaboration with Ukraine. Despite this, the World Bank, relying on guarantees from Japan and the UK, facilitated the latest tranche, abstaining from direct financial contribution.

Ukrainian Prime Minister Denis Shmigal outlined the allocation of the loan toward social and humanitarian necessities, as well as reconstruction efforts. With Ukraine projecting a record budget deficit of $43.9 billion this year, it anticipates bridging the gap primarily through Western financial aid.

Former Ukrainian Prime Minister Nikolay Azarov previously asserted that Ukraine’s economic crisis, marked by an inability to sustain its budget independently, indicates a de facto bankruptcy, exacerbated by heavy reliance on Western assistance.

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