Ukraine prepares for harsh winter after Russian attacks on economy

Officials in Ukraine warned that the country is bracing itself for a harsh winter, as Russian attacks on its infrastructure and export industries compound a growing budget crisis.

The Economy Minister Oleksandr Kravchenko stated that the damage to Russian infrastructure and fixed assets was estimated to be close to $10 Billion this year. In addition, the wider economic costs and de facto blocking of its ports are seen as about 1.5 percentage points on the gross domestic product.

Kravchenko stated that "we anticipate a difficult winter, both in terms critical infrastructure which is destroyed by Russian attacks every day, as well as the overall economic situation in the country."

He told diplomats, investors and officials at a YES Conference in Kyiv that "this all happens when the budget is very tight and fiscal?space is extremely constrained."

Russia and Ukraine are increasingly targeting each other's economic assets and logistics networks to try and undermine the other's war efforts.

Since more than two weeks, Russia has been launching near-constant attacks on Kyiv, using jet-powered drones that are faster. This has disrupted life, business, and government operations.

Both Russia and Ukraine deny that they deliberately target civilians during air strikes.

Moscow has also blocked Ukraine's Black Sea port by intensifying air strikes on the southern regions of the country.

Kravchenko stated that the blockade could result in a loss of about $40 billion dollars in export revenues. Ukraine's major exports, agricultural products and steel and iron, are shipped through its Black Sea port.

Budget Revenue Falls Behind

The domestic budget has been under pressure as Russian attacks have damaged infrastructure and industry.

Roksolana Piedlasa is the head of the budget committee of the parliament. She said that domestic revenue was $1.35 billion below expectations in the first eight month of the year. A quarter of these losses were recorded just in August.

She said that the war is becoming more expensive and Ukraine cannot fully fund its defense needs with domestic resources as it did in previous years.

In the first eight-month period of this year, Ukraine spent about $42 billion for its defence. This does not include in-kind support. Pidlasa stated that domestic revenue generation and borrowing from local sources only yielded $39 billion during this period.

She said, "Unfortunately this year the war is so expensive that we cannot even cover our own share of the costs."

She said that the daily cost of war increased to $190 million in this year, compared to $140 million by 2024, due to inflation, an increase in troop numbers, increasing social payments to families of fallen soldiers, and a higher consumption of ammunition.

Ukraine will face a?funding gap for its defense through the end this year. The government is trying to find ways to reduce or delay non-military spending, and is in negotiations with its Western allies on financial support. But so far there hasn't been a clear solution.

(source: Reuters)