Indian envoy warns of 'big red line,' days after charges laid in Nijjar case
India's envoy to Canada insists relations between the two countries are positive overall, despite what he describes as 'a lot of noise.'
Even as Ukraine celebrates recent battlefield victories, its government faces a looming challenge on the financial front: how to pay the enormous cost of the war effort without triggering out-of-control price spikes for ordinary people or piling up debt that could hamper postwar reconstruction.
The struggle is finding loans or donations to cover a massive budget deficit for next year -- and do it without using central bank bailouts that risk wrecking Ukraine's currency, the hryvnia.
Economists working with the government say that if Ukraine can shore up its finances through the end of next year, it is Russia that could find itself in financial trouble if a proposed oil price cap by the U.S., European Union and allies saps Moscow's earnings.
Here are key facts about Ukraine's economic battle against Russia:
In the first days of Russia's invasion, the Ukrainian government turned to foreign help that came at irregular intervals. When it didn't have enough, the central bank bought government bonds using newly printed money. The alternative would have been to stop paying people's pensions and state salaries.
Economists say printing money -- while a badly needed stop-gap measure at the time -- risks letting inflation get out of control and collapsing the value of the country's currency if it continues.
Ukraine has painful memories of hyperinflation from the early 1990s, economist Nataliia Shapoval said. As a child, she watched her parents use large bundles of bills for everyday purchases as the currency lost value day by day, before being replaced by today's hryvnia.
"Ukraine has been through this, so we know what inflation that is out of control looks like, and we don't want this again," said Shapoval, vice-president for policy research at the Kyiv School of Economics. "The government and the central bank are already on the slippery slope by printing so much."
Price stability and the ability to pay pensions have enormous impact on ordinary people and society at a time when Russia is trying to demoralize the population by knocking out power and water heading into winter.
With inflation already high at 27%, price hikes have made it hard for lower-income people to afford food.
Bread that used to cost the equivalent of 50 U.S. cents has doubled, said Halyna Morozova, a resident of Kherson, a recently liberated southern city.
"It is very depressing, and we are nervous. We were living on old stocks (of food), but now the light is turned off, the refrigerator doesn't work and we have to throw away the food," the 80-year-old said recently.
She said the Russians kept paying her Ukrainian pension in rubles but since they started to withdraw in October, she has received nothing. She's counting on the government to return any pension money that was lost, she said.
Tetiana Vainshtein, also in Kherson, says natural gas is too expensive to keep her home heated. "I am cold. I like warmth, and I'm terribly cold," the 68-year-old said.
Bank closures during the Russian occupation kept her from getting her pension cash, forcing her to carefully ration every hryvnia for food, she said.
President Volodymyr Zelenskyy says Ukraine needs US$38 billion in outright aid from western allies like the U.S and 27-nation EU, plus $17 billion for a reconstruction fund for war damage.
Economists associated with the Kyiv School of Economics say a lower overall total of US$50 billion from donors would be enough to get Ukraine through the year.
Defence spending is six times higher in the 2023 budget recently passed by the Ukrainian parliament compared to last year. Military and security spending will total 43% of the budget, or an enormous 18.2% of annual economic output.
The 2.6 trillion hryvnia budget has a yawning 1.3 trillion hryvnia deficit, meaning the government needs to find US$3 billion to $5 billion a month to cover the gap. Recent attacks on energy infrastructure since the budget passed will only increase the financing need because repairs can't wait for postwar reconstruction and will hit this year's budget.
Despite western sanctions, Russia's economy has fared better than Ukraine's because high oil and natural gas prices have bolstered the Kremlin's budget.
Plans by the EU and allies in the Group of Seven democracies to place a price cap on Russian oil sales aim to change that.
The Kyiv school economists say "by the middle of next year, we believe that the economic situation will shift strongly in Ukraine's favour, making strong partner support particularly important over the period until that point."
The U.S. has been the leading donor, giving US$15.2 billion in financial assistance and $52 billion in overall aid, including humanitarian and military assistance, through Oct. 3, according to the latest available data compiled by the Ukraine Support Tracker at the Kiel Institute for the World Economy.
EU institutions and member countries have committed $29.2 billion, though "many of their pledges are arriving in Ukraine with long delays," said Christoph Trebesch, who heads the tracker team.
The European Commission, the EU's executive arm, has proposed 18 billion euros in no-interest, long-term loans for next year, which still need approval from member governments. The U.S. will likely contribute more as well.
Ukraine, however, is appealing for grants over loans. If all the financing comes as loans, debt would rise to over 100% of annual economic output from around 83% now and 69% before the war. That burden could hold back spending on the war recovery.
The US$85 billion in total global assistance to Ukraine, according to the Ukraine Support Tracker, is less than 15% of the support European governments have pledged to shield consumers from high energy costs resulting from Russia's natural gas cutbacks.
To get loans, the commission proposed requiring Ukraine to improve its record on corruption. Since 2014, Ukraine has raised its score on Transparency International's corruption perceptions index from 26 to 32 out of 100 -- not great, but improving.
U.S. officials have praised Ukraine's online procurement platform for introducing transparency in government contracts -- one big source of corrupt dealings and collusion -- and saving US$6 billion.
The prospect of EU membership also gives Ukraine incentive to clean up corruption.
The IMF has given Ukraine US$1.4 billion in emergency aid and $1.3 billion to cushion the shock from lost food exports.
IMF Managing Director Kristalina Georgieva told The Associated Press that the Washington-based fund is working on more assistance in co-operation with the Group of 7 wealthy democracies, chaired this year by Germany.
"We are on the way to come up with a sound and sizable program for Ukraine," she said, "with the support specifically of the G7 and the German leadership."
However, for a larger loan program of US$15 billion to $20 billion, it goes against IMF practices to lend money where the debts are not sustainable, and the war raises questions about that. The organization has been reluctant to lend to countries that don't control their territory, a condition Ukraine does not yet meet.
The IMF "would have to seriously twist its existing framework or change it to provide substantial sums," said Adnan Mazarei, senior fellow at the Peterson Institute for International Economics and former deputy director of the IMF's Middle East and Central Asia department.
As a prelude to a possible assistance package, the IMF is holding a four-month period of consultation and enhanced monitoring of Ukrainian economic policies to help Kyiv establish a track record of good practice. That could build confidence for other donors to step in.
------
Associated Press writer Sam Mednick contributed from Kherson, Ukraine.
India's envoy to Canada insists relations between the two countries are positive overall, despite what he describes as 'a lot of noise.'
With Donald Trump sitting just feet away, Stormy Daniels testified Tuesday at the former president's hush money trial about a sexual encounter the porn actor says they had in 2006 that resulted in her being paid to keep silent during the presidential race 10 years later.
The U.S. paused a shipment of bombs to Israel last week over concerns that Israel was approaching a decision on launching a full-scale assault on the southern Gaza city of Rafah against the wishes of the U.S.
Footage from dozens of security cameras in the area of Drake’s Bridle Path mansion could be the key to identifying the suspect responsible for shooting and seriously injuring a security guard outside the rapper’s sprawling home early Tuesday morning, a former Toronto homicide detective says.
A chicken farmer near Mattawa made an 'eggstraordinary' find Friday morning when she discovered one of her hens laid an egg close to three times the size of an average large chicken egg.
Susan Buckner, best known for playing peppy Rydell High School cheerleader Patty Simcox in the 1978 classic movie musical 'Grease,' has died. She was 72.
Accused killer Jeremy Skibicki could have a challenging time convincing a judge that he is not criminally responsible for the deaths of four Indigenous women, a legal analyst says.
A Calgary bylaw requiring businesses to charge a minimum bag fee and only provide single-use items when requested has officially been tossed.
Two Nova Scotia men are dead after a boat they were travelling in sank in the Annapolis River in Granville Centre, N.S., on Monday.
An Ontario man says he paid more than $7,700 for a luxury villa he found on a popular travel website -- but the listing was fake.
Whether passionate about Poirot or hungry for Holmes, Winnipeg mystery obsessives have had a local haunt for over 30 years in which to search out their latest page-turners.
Eighty-two-year-old Susan Neufeldt and 90-year-old Ulrich Richter are no spring chickens, but their love blossomed over the weekend with their wedding at Pine View Manor just outside of Rosthern.
Alberta Ballet's double-bill production of 'Der Wolf' and 'The Rite of Spring' marks not only its final show of the season, but the last production for twin sisters Alexandra and Jennifer Gibson.
A mother goose and her goslings caused a bit of a traffic jam on a busy stretch of the Trans-Canada Highway near Vancouver Saturday.
A British Columbia mayor has been censured by city council – stripping him of his travel and lobbying budgets and removing him from city committees – for allegedly distributing a book that questions the history of Indigenous residential schools in Canada.
Three men in Quebec from the same family have fathered more than 600 children.
A group of SaskPower workers recently received special recognition at the legislature – for their efforts in repairing one of Saskatchewan's largest power plants after it was knocked offline for months following a serious flood last summer.
A police officer on Montreal's South Shore anonymously donated a kidney that wound up drastically changing the life of a schoolteacher living on dialysis.