Can Ukraine Pay its Debts?

Authors: Barrie Hebb and Luke Cooper

The research report presents a wide range of macroeconomic data to assess the strength of the Ukrainian economy and, by extension, the state’s capacity to meet its external liabilities. If debt sustainability is measured against the size and productive capacity of the working population, this unfortunately underlines the scale of the challenge that Ukraine faces. Even prior to the full-scale invasion, demographic trends such as the age dependency ratio were moving in the wrong direction. Furthermore, the incomes of the working population are chronically low and have worsened dramatically since February 2022. The number of Ukrainians with incomes at or below subsistence in Ukraine is often underestimated in data collected in workplaces with 10 or more formally employed workers. Taking a more holistic view of the data that captures in particular levels of rural poverty unfortunately shows that the income situation is worse than is often reported.

This report makes a number of warnings on the Ukrainian state’s fiscal position, specific recommendations to Ukraine’s donors, and recommendations for the Government of Ukraine’s economic strategy. The aim is to realise Ukraine’s significant economic potential through a strategy for sustainable improvements in incomes, productivity and productive capacity.

Learn more about PeaceRep’s Ukraine programme