Estimating Ukraine’s financial losses from the war

Abstract

Military aggression has caused many adverse consequences in various spheres of Ukrainian society, including significant losses in the economy. In such circumstances, it is relevant to calculate financial losses to determine the necessary amount of aid and investment for post-war economic recovery. The purpose of the research is to assess the impact of the war on the dynamics of key economic indicators and to calculate the financial losses of the state. To achieve this purpose, the research makes a forecast assessment of macroeconomic indicators. To determine the level of GDP decline, the forecasts of the International Monetary Fund, the World Bank, and the Ukrainian government were considered. The assessment of the expected level of decline is based on the regional structure of GDP production. The losses were estimated as the difference between the “pre-war” level of the indicator and the projected values of the indicators obtained after considering the impact of the war. It is established that military aggression is the reason for the reduction in the volume of GDP produced, which in the future will significantly reduce tax revenues, consolidated budget revenues, and the number of financial resources redistributed by the state. The author notes that among the consequences of war are direct losses (those that can be estimated in monetary terms) and indirect losses (lost opportunities that cannot be expressed in monetary terms). The author outlines the consequences of the war in the future. It is determined that the cause of long-term adverse effects is an increase in the level of public debt, depreciation of the national currency, reduction of gold and foreign exchange reserves, and outflow of foreign direct investment. The results of the study are intended to be used by public authorities, financial policymakers, academics, and potential investors. In addition, they can serve as a foundation for determining the number of reparations that Ukraine will claim after the war is over.