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(Bloomberg) — Ukraine faces sweeping cuts to its war-ravaged budget unless lawmakers adopt unpopular measures needed to access billions in western aid ahead of winter, according to its new prime minister.
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A months-long deadlock in parliament has already delayed about $4 billion in European Union assistance that was due to arrive in the third quarter, Sergii Koretskyi told Bloomberg News. He described the situation of Ukraine’s public finances as “close to critical” in separate remarks on Telegram on Monday.
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The risk of a funding crunch has emerged as the first key test for Koretskyi, a former energy-sector executive, who was picked by President Volodymyr Zelenskyy two months ago to prepare Ukraine for what’s likely to be the most difficult winter since the start of Russia’s full-scale invasion.
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Lawmakers’ resistance to backing reforms demanded by the EU and the International Monetary Fund, Ukraine’s two biggest donors, follows Kyiv’s admission that it was facing an additional $27 billion defense budget shortfall for this year due to rising costs of war.
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“I see this as a lack of awareness of the scale of the problem,” Koretskyi, 48, said in Kyiv in his first interview with international media since taking office. “This budget is not elastic. So I want to tell you in advance: no. You need to vote. You need to move forward.”
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At the same time, Koretskyi urged international partners to reduce funding uncertainty by making medium- and long-term financial commitments for Ukraine. Zelenskyy has separately called on the EU to accelerate some payments from the bloc’s €90 billion ($104 billion) loan earmarked for next year due to growing budget difficulties, prompting questions from western allies.
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Koretskyi said that Ukraine now often has to use costly missiles to shoot down more advanced Russian Shahed drones. That’s one of the reasons why the bill for the war, currently in its fifth year, continues to climb, he said.
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“If an interceptor costs tens of thousands, now it costs hundreds of thousands, perhaps as much as a million,” he said.
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Kyiv’s foreign donors have demanded measures be undertaken to reduce the size of Ukraine’s shadow economy, bolster tax revenues, and align the nation’s laws with the EU.
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The most contentious requirement concerns a value-added tax on cheap foreign parcels, which are currently exempt from such duties. Critics argue it would do little to boost tax revenue while increasing the burden on Ukrainians, many of whom rely on such parcels.
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Koretskyi has defended the proposal, saying that the current arrangement gives foreign producers an unfair advantage. The government has resubmitted the parcel bill, urging lawmakers to pass it as soon as possible.
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“What is the alternative?” he said. “Cutting spending to the bare minimum.”
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‘To Endure’

