News State macroeconomics 31 March 2022
Expert’s calculations structured damage into three categories
Ukraine’s losses from the Russian military aggression exceed $1 trillion. The amount takes into account both the damage to the economy, and the infrastructure, and future losses in the following years. It was stated by the Prime Minister of Ukraine Denys Schmyhal in an interview with Interfax Ukraine.
According to the Prime Minister, it is expert calculations, but the damage is structured. The first component is direct infrastructural damage.
“This is what we have lost as the result of the direct destruction – bridges, roads, housing, buildings, but these numbers are growing daily. The current evaluation is about $120 million. If you take into account military infrastructure, and other civilian expenses, the amount is over $270 million”, explained Denys Schmyhal.
The second component is the calculation of Ukrainian economic losses.
“This is a drop in the amount of the GDP calculated for the months in case of continued military actions. This is lost profit, and non-invested capital of enterprises. According to calculations, this amount is more than $290 million billion”, stressed the Head of the government.
The third part is the state’s losses as a result of GDP decrease in the future.
“Before the war we had economic growth plans. Now there have been destroyed enterprises that should bring income to the state. Therefore there will be significant adjustment after the end of military actions”, he added.
The register of lost property has been created to have detailed calculation, part of it will work through Diya, and each person will be able to register the damage caused to the household.
“We will have an accurate, almost accounting record of all losses. This is a standard approach to such cases”, concluded the Head of the government.
Note that approaches to calculate losses could vary significantly. As a part of a “Russia will pay” project, the losses of the Ukrainian economy to the physical infrastructure as of March 24 were estimated at $63 billion.
As a reminder, the Cabinet of Ministers estimates the fall of Ukraine’s GDP by 35% due to the open military aggression of the Russian Federation. Military actions are taking place in 10 regions of enterprises’ locations, which accounted for around 50% of the country’s GDP.
On March 20, the Cabinet of Ministers adopted Resolution No. 326 “On approval of the Procedure for Determining Damage, and Losses caused by the Armed Aggression of the Russian Federation”. The document defines key areas of assessing the level of damage. These include the economic losses of enterprises due to destruction, and damage to their property, as well as lost profits due to impossibility or obstacles for the economical activity. Now government agencies are working on methods for compensation of damage to affected enterprises.