Damage to energy system could worsen Ukraine's GDP forecast for 2023 - PM
MOSCOW. Dec 22 (Interfax) - Damage to Ukraine's energy system could worsen the country's GDP rate for 2023 by 3-9 percentage points, Ukrainian Prime Minister Denis Shmygal said.q
"We have already lowered the forecast from 4.6% to 3.2% for the next year. But everything will depend on the situation. The damage to the power system could worsen the forecast by another 3 to 9 percentage points. That is, next year we could have a fall in GDP instead of the expected growth," he said in an interview with Ukrainian journalists.
The prime minister emphasized that at the beginning of the crisis most experts' forecasts were pessimistic and projected the Ukrainian economic decline at 45% or more, but this forecast did not come true.
"According to the results of nine months, the GDP decreased by 30%. Before the end of the year, we expected a drop of 32%. Currently, [after the damage to the infrastructure] the GDP may fall to 35% in 2022, but not more," Shmygal said.
In early December, First Deputy Economy Minister Denis Kudin said that damage to the energy infrastructure increased the rate of economic decline in Ukraine this November against last November to approximately 41% compared to 39% in October and 30.8% in Q3.
For its part, the National Bank of Ukraine (NBU) noted that next year, even in the baseline, relatively optimistic scenario with efficient protection of energy facilities and prompt restoration of the power system, the GDP growth rate will be very sluggish and much lower than 4%, which the NBU allowed in the October forecast.
Assessing the impact of a possible full blackout, Prime Minister Shmygal said it would take at least a week to recover from it.
"In the most complicated case of a full blackout, efforts to overcome it take seven to 10 days. This is according to the calculations of our power engineers. I emphasize that these are theoretical calculations," Shmygal said in an interview with Ukrainian journalists.
Speaking of cooperation with international financial institutions, Shmygal said that by the end of 2022 Ukraine expects to sign a memorandum on granting 18 billion euros of macrofinancial assistance from the European Union in 2023.
"We expect to receive at least another $10 billion in the budget from the United States. We are also working with the IMF [International Monetary Fund], there is a monitoring program and the prospect of a broad program by the end of the first quarter," Shmygal said.
The prime minister emphasized that all these funds would enable Ukraine to cover the total deficit of the 2023 national budget of $38 billion.
"I think we will sign it this year, and in the first quarter, in January, we expect to receive 3 billion euros of this macro-financial assistance from the European Union. These are our political agreements and such a vital necessity," Shmygal said.
Touching upon agricultural issues, the prime minister said that Ukraine expects to harvest 70-75% of the 2022 yields in the territories under the country's control next year.
"This year, winter grain crops were sown on 4.8 million hectares in the controlled territories. This is about 40% less than last year. We expect that more spring crops will be sown this spring," the prime minister said.
He noted that the government is working to draw international support, which should have a positive impact on the gross harvest next year. Thus, the United Nations Food and Agriculture Organization (FAO) has already agreed to provide the country with seeds, which will allow increasing the total area sown with spring crops in 2023 by 30%. For comparison, Ukraine during the sowing campaign of 2022 planted 14.16 million hectares of main crops, or 83.7% of the 2021 indicators of 16.92 million hectares.
In addition, Ukrainian agricultural producers received portfolio loan guarantees for almost 24 billion UAH in 2022, and 81.2 billion UAH of credit funds were provided under the 5-7-9 program.
"We will continue supporting the agricultural sector, but our resources are limited. That is why we are in talks about the support of the European Union, the U.S. and the FAO. We have already reached agreements with many parties, in particular with the European Commission and the USAID [the U.S. Agency for International Development], they are ready to finance the grant programs to support agricultural producers and the loan programs," the prime minister said.
Shmygal also noted the importance of prolongation of the Istanbul grain agreements, as the export of agricultural products by sea enables Ukrainian farmers and agrarians to survive. Besides, deliveries of agricultural products from Ukraine guarantee stability of the geopolitical situation in Africa and the Middle East, since Ukrainian grain is a key factor in preventing starvation for many countries. To prevent it, Ukraine is now implementing the Grain from Ukraine humanitarian initiative.
According to the prime minister, since the outbreak of the crisis, the Grain Corridor has allowed Ukraine to export 13 million tonnes of agricultural products, while its total exports during this period amounted to 32 million tonnes.
As reported, Ukrainian agrarians harvested 69.92 million tonnes of major crops from the total area of 16.85 million hectares by December 16. The harvesting of wheat, barley, peas, rapeseed, and sugar beets was completed. Sunflower, buckwheat and millet have been harvested at 98% of the area, soybean at 99% and corn at 70%.
The final yield of wheat in this season totaled 19.4 million tonnes from 4.7 million hectares, barley - 5.6 million tonnes from 1.6 million hectares, rapeseed - 3.2 million tonnes from 1.1 million hectares, pea - 261 tonnes from 115,000 hectares, sugar beets - 9 million from 179,000 hectares. In addition, by December 16, a total of 18.4 million tonnes of corn was harvested from 2.9 million hectares, 10.1 million tonnes of sunflower from 4.6 million hectares, 3.7 million tonnes of soybeans from 1.5 million hectares, 157,000 tonnes of buckwheat from 115,000 hectares, and 100,000 tonnes of millet from 43,000 hectares.
As of December 19, the total tonnage of grain and other agricultural products exported from the three Ukrainian seaports reached 14.36 million tonnes. A total of 1,139 vessels were allowed to sail at that time: 571 to arrive at the Ukrainian ports and 568 to leave them.
