The state of the financial system, budget priorities for 2025, and the $50 billion ERA mechanism: Sergii Marchenko spoke at the meeting of the G7 financial bloc

Minister of Finance of Ukraine Sergii Marchenko gave a speech online at a meeting of finance ministers, central bank governors of the G7 member states, the IMF and World Bank, the European Commission and the OECD.

The parties discussed the state of Ukraine's financial system, financial priorities for 2025, and the implementation of the G7 Extraordinary Revenue Acceleration Loans for Ukraine (ERA) mechanism.

In his speech, Sergii Marchenko emphasized the key role of the G7 in ensuring the balance of the State Budget of Ukraine in the context of a full-scale war. In total, external financing for this period amounted to USD 106.2 billion, with more than 85% provided by the G7 and the EU.

The Minister also noted Italy's leadership during its G7 presidency, noting that 2024 was a year of important achievements in attracting international support.

Speaking about the state of Ukraine's economic and financial systems, Sergii Marchenko emphasized that despite the wartime challenges, Ukraine's economy and public finances are resilient. The economy grew by 4% in the first 11 months of 2024. Tax and customs revenues of the State Budget for this period increased by USD 1.7 billion compared to the same period last year. Direct budget support in 2024 has already reached USD 37 billion and is expected to exceed USD 41 billion by the end of the year. 

However, russia's systematic shelling of Ukraine's energy system is increasing losses and slowing economic activity. The need for international support remains. In this context, Sergii Marchenko thanked the G7 for launching the ERA Mechanism in the amount of USD 50 billion at the expense of revenues from immobilized assets of russia.

“These funds will support Ukraine's financial stability in 2025 and will be also distributed for 2026 and 2027. This historic precedent makes russia pay for the damage it has done to Ukraine. A number of agreements have already been signed, and we expect the first tranches to be disbursed in late 2024 and early 2025,” said Sergii Marchenko. 

The Minister of Finance outlined the key priorities of the budget for 2025, emphasizing that 26.3% of GDP will be allocated to security and defense. Another important task is to strengthen the domestic financial capacity. The budget deficit is projected to decrease to 19.4% of GDP from 24.2% in 2024. 

Reaffirming Ukraine's commitment to reforms, Sergii Marchenko noted that 199 reform measures were implemented in 2024, contributing to economic sustainability and attracting external financing: “In 2025, efforts will be focused on developing the economy, implementing the reforms already launched and creating the basis for Ukraine's post-war recovery.”

In his address to the partners, the Minister of Finance emphasized the crucial role of international support and cooperation in Ukraine's struggle to return peace to the European continent.