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Multilevel Financial Responses Supporting Ukraine’s Fight for Democracy

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Giuseppe Grossi and Veronika Vakulenko
April 22, 2022

Democracy emphasizes human rights, peace and security: core values for the United Nations and clearly traced in the U.N. Sustainable Development Goals. Despite democracy’s positive influence on society, preserving it can carry strikingly high risks, as has been evidenced recently.

On February 24, 2022 the war in eastern Europe began. The full-scale Russian invasion of Ukrainian territories had immediate consequences and devastating effects on the Ukrainian economy have since ensued: disruption of economic chains, massive relocation of people and damage to infrastructure. Estimates of economic losses are incomplete, yet Ukraine indubitably faces huge economic and social challenges in maintaining and rebuilding its democratic state.

To support Ukraine in its fight for democracy, the Western world stood up in unity and acted through multiple vehicles—international organizations, national governments, private and nonprofit organizations—operating at different governance levels.

The reaction of two key international financial institutions—the International Monetary Fund (IMF) and World Bank (WB)—was significant. IMF and WB responded to the requests of the Ukrainian government with extensive support packages to sustain macro-financial stability:

  • As stated in IMF’s press release from March 9, it approved the Rapid Financing Instrument providing 50 percent of the quota owned by Ukraine as a member country: SDR 1 billion, roughly $1.4 billion.
  • According to the latest WB announcement, the amount of the total support by WB to Ukraine has reached $925 million. It approved a support package of around $723 million. It consists of: (a) development policy loans “Financing of Recovery from Economic Emergency in Ukraine—FREE Ukraine” ($489 million), of which $350 million is WB’s loan and $139 million are loan guarantees from the Netherlands and Sweden; (b) a donor trust fund set by WB with contributions from the United Kingdom, Iceland, Denmark, Latvia and Lithuania totaling $134 million; and (c) parallel financing from Japan worth $100 million. Additionally, WB approved restructuring a project for higher education, allowing the transfer of $100 million to the general fund of the state budget for financing academic and social scholarships.

The leaders of Northern America and the European Union (EU) provided different military and humanitarian support to Ukraine. According to the Pentagon, since the start of the invasion, President Biden approved total U.S. security assistance to Ukraine of more than $1.7 billion. The United States has provided nearly $293 million in humanitarian aid since late February, making the country the dominating single-country donor of humanitarian assistance to Ukraine. On April 13, the European Council approved €1.5 billion of military and humanitarian aid for Ukraine. In addition, the EU agreed to provide satellite intelligence to Ukrainian armed forces. Single European countries and the United Kingdom have provided military and humanitarian aid and accommodated their policies to meet an outstanding wave of Ukrainian refugees. On April 9, the EU announced that the social media campaign “Stand Up for Ukraine”, which was launched together with the government in Canada, has raised €9.1 billion for Ukrainians fleeing the war within and out of Ukraine. Of this amount, €1 billion was granted by the European Commission. According to the Operational Data Portal, by the U.N. Refugee Agency, as of April 15, more than 4.7 million people fled Ukraine.

Almost a month into the war in Ukraine, national responses by the Ukrainian Ministry of Finance (MoF), in cooperation with other levels of governments, have been framed around six key areas:

  1. Launching a special international account to raise financial support for Ukrainian armed forces. During the first day of the war, nearly UAH300 million (per the March 22 exchange rate of UAH1 = $29.25) was transferred as donations from national and international private and nonprofit organizations.
  2. Issuing military government bonds (the nominal value of one bond is UAH1,000 for one year and 11 percent yield) to support Ukrainian armed forces and ensure the stability of the public financial management system under martial law. Since the start of the war six auctions have been organized. By April 12, around UAH38.607 billion had been attracted to the state budget of Ukraine.
  3. Simplification of customs and procurement policies:
    • A list of goods recognized as humanitarian aid was approved by the Cabinet of Ministers of Ukraine to simplify procurement and ensure control over goods purchased specifically for military purposes.
    • Simplification of customs clearance for certain goods imported to Ukraine during the period of martial law.
  4. Changes in taxation policies for local governments and private actors.
  5. Procedural simplification of the public financial management system affecting processes for approving and amending passports of budget programs and estimates and for performing transactions by the Treasury. In addition, advance payments by military administrations have been permitted during procurement of personal protective equipment.
  6. Support for citizens from areas affected by military actions such as: one-time payment of UAH6,500 and monthly financial support for internally displaced persons (UAH2,000 for an adult and UAH3,000 for a child).

To summarize, this article presents immediate multilevel financial responses of international organizations (IMF, WB), the United Sates, the EU and several European countries to support the Ukrainian government in managing economic and social crises caused by the Russian invasion. These responses, together with internally adjusted public financial management systems, seek to help Ukraine preserve its macro-economic stability and promote solidarity within the democratic state. The Ukrainian crisis revealed the relevance of multilevel and collaborative governance between numerous vehicles (international organizations, national governments, private and nonprofit organizations) that served as vital channels in helping Ukraine to defend its territories and people, as well as to support local residents and refugees fleeing to Europe.


Author: Giuseppe Grossi is professor in accounting at the Faculty of Business of Kristianstad University in Sweden and Nord University Business School in Norway. He is editor in chief of the Journal of Public Budgeting, Accounting and Financial Management (Emerald) and technical advisor of the International Public Sector Accounting Board (IPSASB) of IFAC. His research interests are framed around public sector budgeting, accounting and auditing, and hybrid governance and organizations. He can be reached at [email protected].

Author: Veronika Vakulenko is associate professor in accounting and management control at Nord University Business School in Norway. Her research interests are framed around democratic governance, reforms of public financial management systems, and accounting and auditing in the public sector. She can be reached at [email protected]

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