Ukraine is preparing a “Marshall Plan”: what will billions go to and how to attract even more funds

Europe and the entire civilized world promise to help restore Ukraine after the victory over Russia. And no one doubts that our country will emerge victorious from the war unleashed by Putin. Therefore, this week a conference of donor countries was held in Warsaw, which are preparing an analogue of the “Marshall Plan” for Ukraine.

Today, together with experts, they figured out what the plan for restoring Ukraine after the war should be.

Billions of dollars and basic principles

After the end of the conference in Warsaw, the loudest statement was the amount of funds raised to support the economy of the warring country. At the end of the event, it was announced that Ukraine would receive about $6.5 billion in aid, as well as several hundred million euros more European countries would allocate additionally on their behalf.

But much more interesting, in our opinion, were the statements of the head of the European Council, Charles Michel. First, he said that the assets of the Russians who are under sanctions should be confiscated in order to further use them to repair the damage caused by Russia in the war against Ukraine.

In addition, the United States is developing a mechanism for the transfer of frozen assets of the Central Bank of the Russian Federation in favor of Ukraine. True, this can take quite a long time.

In order to fill the trust fund for assistance to Ukraine more quickly, a mechanism similar to the one that the IMF used last year, when it distributed several hundred billion dollars to countries to start the economy, will probably be used.

Charles Michel does not rule out that the same tool can be used in the case of Ukraine. According to him, from 5 to 10% of the IMF funds can be used for these purposes.

In addition, the head of the European Council said that the funds will go in three directions – humanitarian support, liquidity, which involves direct assistance to the budget, which was left without a part of tax revenues, and the third point is the program for the direct restoration of the country. At the same time, Charles Michel believes that the trust fund should be activated “as soon as possible.”

The main thing is to do without loans

Ukrainian experts say that in the current situation, when the Ukrainian economy can lose up to 50% of GDP due to Russian aggression, our country cannot take on new loan obligations. After all, every month of the war will increase the already not a small year.

“Each month of the war brings us destruction and at least $3 billion in donor funding per month, or $36 billion a year. And this, by the way, is not help, but real loans that we are now being given. dollars to 91 billion dollars. And all this will happen against the backdrop of a fall in GDP and a mass exodus of people from Ukraine,” says economist Daniil Monin.

Economist Aleksey Kushch agrees with his colleague, who believes that against the backdrop of falling GDP, public debt could rise to a dangerous figure of 120-130%.

“This is a state of bankruptcy and it will be impossible to get out of it by paying off debts. One of the options for us is the redistribution through the IMF in favor of Ukraine of the so-called SDRs (special drawing rights – a surrogate currency of the fund) belonging to the seven richest countries in the world. Especially since such the scheme was already used last year to finance developing countries for hundreds of billions,” says Alexey Kushch.

How to raise more funds

The economist says that it is necessary to introduce parallel financing mechanisms, with the participation of other legal entities and individuals.

“Now many residents of other countries would like to finance Ukraine. Some for humanitarian reasons, others want to help, others share our values: freedom, independence, democracy. There are many, millions of such people. These are ordinary people who are ready to transfer a couple of hundred euros / dollars, and companies willing to donate millions, and personal pillars of humanity, such as Richard Branson or Elon Musk, who are able to donate much more,” says Alexey Kushch.

According to him, Ukraine should turn into a single crowdfunding platform for global public financing of peace and security. The United24 global initiative, recently initiated by Volodymyr Zelensky, could become such a tool.

“In crowdfunding, it is important to provide two basic success factors. The first is the purpose of funding, which forms a community of individuals. The second is trust in the recipient,” says Kusch.

Therefore, the use of these funds should be as transparent as possible and confirmed by international auditors.

In addition, the expert proposes a mechanism for raising funds by issuing a special Ukrainian cryptocurrency. Another model that is very promising for us.

“Attracting investments to Ukraine in the post-war period and the very technology of restoring the country should also be formed on the principles of Wikinomics, that is, mass attraction of private investors to Ukrainian projects. First of all, it should be a domestic investor, then migrant workers, diaspora and foreign companies”, – says Alexei Kushch.

According to him, Ukraine should become an inclusive and business-friendly country, despite geopolitical risks.

Earlier we wrote about how experts propose to unblock ports and arrange exports to Europe. Read more about the Economic Renewal Plan of Ukraine here.