President of Ukraine

It would be appropriate to continue providing financial assistance to Ukrainian refugees from allied countries even after their return to Ukraine - Oleg Ustenko

7 June 2022 - 19:03

The financial resources provided by the EU, the United States and other allies of Ukraine to support our citizens fleeing Russian aggression in other countries should be used to encourage these refugees to return home. This is stated in a joint article by adviser to the President of Ukraine on economic issues Oleg Ustenko and professor at MIT Sloan and former chief economist at the International Monetary Fund Simon Johnson for the American newspaper Los Angeles Times.

“More than 6.5 million Ukrainians escaped the country and found amazing support in neighboring countries, including EU countries, as well as non-EU countries such as Moldova and Norway. Taking care of refugees is expensive — they need food, shelter, schooling, healthcare and other services. Many countries have also provided daily cash allowances,” the article reads.

Although part of this cost has been borne by philanthropists, the budgetary cost to EU governments is at least 60 billion euros per year (about 10,000 euros per person), as stated by the authors.

Some Ukrainian refugees, in particular IT specialists, continue working remotely even while outside Ukraine. Hence, they are able to earn income and support our economy. But many jobs in Ukraine still do not provide opportunities for remote work.

“Overall, on its current course, the economy is likely to decline by at least 40% this year compared with 2021 and, until the refugees return home, a sustained recovery is hard to achieve,” the authors predict.

According to the article, as of now, 30,000 people are returning to Ukraine every day. They can be productively employed to rebuild and repair the economy, but the government is hard-pressed to support them and their wages. The government budget is already running a monthly deficit of around 5 billion euros to cover war-related spending.

“That’s why it would make sense to have some of the EU financial support for refugees made available to them when they return to Ukraine,” the authors emphasize.

Oleg Ustenko and Simon Johnson name three possible ways to implement such support.

“One approach is to let refugees bring their cash benefits back with them to Ukraine for a limited period, such as six months. Another is to provide additional resources to the Ukrainian government to hire more people for rebuilding work,” the article reads.

Both these policies will pull more refugees home, but the process may be slow. According to the experts, easier and more effective would be for the Ukrainian government to use this funding, received from the EU, to create a temporary basic income program for all Ukrainians in the country. 

“A modest cash grant program would help millions now struggling to feed their families stay in their communities and increase economic activity,” Oleg Ustenko and Simon Johnson noted.

According to them, if half of the more than 6 million Ukrainian refugees were to return home, European governments could significantly reduce their refugee spending and redirect tens of billions of euros into uses that would have long-term benefits for Ukraine. Any such program could be wound down as Russian forces are expelled from Ukrainian territory and the economy stabilizes.

“We don’t know how long this war will last. The devastation wrought by Russia’s invasion remains incalculable. Eventually, Ukraine, a country of around 40 million, will need international assistance and support to rebuild. Shoring up its economy and beginning that process should start now,” the authors conclude.