25 August 2022

No air raid sirens prevented the special Independence Day episode of the ReinforceUa project. Natalie Jaresko, Minister of Finance of Ukraine (2014 - 2016). She served at a particularly critical moment when the post-revolutionary state was rocked by a deep recession and war on part of its territory. Later, Ms. Jaresko was appointed as executive director of the Financial Oversight & Management Board for Puerto Rico. In that capacity, she saved the country from multibillion debt.

“Everyone knows Ukraine now, and nobody says that it is near Russia. We do not only defend ourselves. Other countries support us because they saw our courage and yearn for freedom, and our skill of stopping the enemy,“ she said to explain how Ukrainians changed the attitude of the global community.

Here are the highlights of Ms. Jaresko's presentation.

- Ukrainian sovereign debt increase is not a bad thing. It is provided by international financial institutions at very low interest rates. In other words, it is cheap money. We wish we could have more grants like the US aid but the EU, EBRD, and other institutions lend money. I don’t think we have much choice when the monthly budget deficit is 5 billion dollars. Our foreign partners give us money with grants and cheap loans. More money is expected in September, but the US has already given its share. EU is slow. We use the share of that money to leverage the inflation because we’d better avoid printing money. That’s why it is critical that partners followed their obligations promptly.

-  After the war, accumulated debt needs to be taken care of. We also should review the situation, and develop the Marshall + plan followed by performance monitoring. If we accumulate too many debts, they need to be restructured. Paying back debts now is not a good way to manage our resources.

- I do not think that we can increase taxes. However, customs seem to be a good source of budget revenues. Recovery of business activities is another priority. Taxes are important but altering them during the war is not a good idea. We also should look at how we spend tax revenues, and whether we support the business community, and SMBs, especially where the internally displaced people concentrate. We need different support programs for various clusters such as the SMB program, agriculture program, etc. We need our partners’ resources for that.

- I worked with the largest bankruptcy case in the USA aggravated by earthquakes, revolutions, civil unrest, and pandemic. We dealt with financial and other problems. Every day of hurricane recovery cost us 100 million dollars. It took us 5 years to prepare for the recovery after that hurricane five years ago. Our main lesson is that we have to start planning immediately before the war is over. We need to plan our work with donors as well.

 - Why does Ukraine need a Marshall+ plan? Because many important things are very different from WWII. At that time, a strong European economy was perceived as a remedy against communism. A strong economy will help Ukraine to deal with the Russian jeopardy. On the other hand, the Marshall plan had only one donor whereas many are ready to help Ukraine. It is very different because, after WWII, the US was the only decision-maker. Nowadays, we are having multilateral cooperation. After WWII the US had 10 – 15 recipients. Now there is only one recipient. It is going to be more complicated. Ukraine needs money to restore its financial system, housing recovery, etc. If Puerto Rico's recovery after one hurricane cost 100 billion dollars, Ukraine may well need from half to one trillion dollars.

- Ukraine does not need technical assistance. Ukrainians are very creative and they are ahead of many markets. For example, fintech is more developed in Ukraine than in the US. Ukrainian apps are better developed than in the US or Europe. What Ukraine truly needs is to get access to the EU and use the opportunities available to many countries long ago. We need to fulfill all the obligations and grab emerging opportunities.

- We are to be confident and show the global community that we defeat corruption. We need to build trust in the purchase system. We need to develop one with donors. All confiscated Russian assets should be allocated to the recovery of Ukraine. We should also start discussing reparations. Russians ruined everything; they must pay the highest price for it. We lack the legislation on confiscated assets, its development will take a long. Besides, donors want to see the private sector protected. Ukrainian IT sector inspires, and businesses that start anew after fleeing from the occupied territories inspire. We are a great inspiration, and it is time for very practical things. Corruption suffocates business activities. Such a situation calls for changes. We should demonstrate our transparency, our fair and working customs and taxes and so is our judiciary system.