THE ROLE OF PUBLIC FINANCE IN UKRAINE’S RECOVERY AND RECONSTRUCTION
DOI:
https://doi.org/10.35774/jee2024.04.615Keywords:
critical infrastructure, foreign aid, public finance, reconstruction, recovery, social protection, war.Abstract
To fight the aggressor and strengthen Ukraine’s economy, the government must play a crucial role in mobilizing domestic and foreign resources, allocating them toward set goals through public expenditure. This paper identifies priority areas for government action in Ukraine’s economic recovery, reconstruction, and EU accession, and proposes various instruments of public finance that should be employed by the national government and international partners during reconstruction. I develop a methodology to assess the consolidated budget expenditure required to cover Ukraine’s recovery and reconstruction needs (RRNs) over the period from 2025 to 2028. My findings reveal that budget expenditures to meet Ukraine’s RRNs will amount to 12.3% of GDP in 2025, 15.5% in 2026, 13.8% in 2027, and 12.7% of GDP in 2028. These results suggest that total budget expenditure (including ordinary government functions) will reach 68% of GDP in 2025, gradually declining to 51.4% of GDP in 2028. I demonstrate the need for additional financial assurances from the EU, the United States, international financial institutions, and bilateral donors to support Ukraine’s recovery and reconstruction program.
JEL: E61, H50, F35, F51.
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Received: September 9, 2024.
Reviewed: October 1, 2024.
Accepted: November 4, 2024.
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