By Stephanie Nebehay
GENEVA (Reuters) – Nine out of 10 Ukrainians could face poverty and extreme economic vulnerability if war drags on next year, wiping out two decades of economic gains, the United Nations Development Program said on Wednesday ( UNDP).
Achim Steiner, UNDP administrator, said his agency was working with the Kyiv government to avoid the worst-case scenario of economic collapse. It aimed to provide cash transfers to families to buy food to survive and prevent them from fleeing while supporting basic services.
“If the conflict is prolonged, if it were to continue, we are going to see poverty rates go up very significantly,” Steiner told Reuters.
“It is clear that the extreme end of the scenario is an implosion of the economy as a whole. And that could ultimately lead to up to 90% of people either below the poverty line or at high risk of (poverty) “, he said in a video interview from New York.
The poverty line is generally defined as purchasing power of $5.50 to $13 per person per day, he added in a video interview from New York. Before Russia launched its invasion on February 24, about 2% of Ukrainians were living below the $5.50 line, he said.
The Ukrainian government’s economic adviser, Oleg Ustenko, said last Thursday that the invading Russian forces had so far destroyed at least $100 billion in infrastructure and that 50% of Ukrainian businesses had closed completely.
“We estimate that up to 18 years of Ukraine’s development gains could simply be wiped out in 12 to 18 months,” Steiner said.
UNDP is looking at “tried and tested” programs that it has used in other conflict situations, he said.
“Cash transfer programs, especially in a country like Ukraine where the financial system and architecture is still functional, where ATMs are available, a key way to reach people quickly is through cash transfers cash or a temporary basic income,” he said.
The logistical challenges were significant but “not insurmountable”, he said.
“Obviously some of the recent announcements from the World Bank and the International Monetary Fund in terms of credit lines and funding being made available will obviously help the Ukrainian authorities to be able to roll out such a program,” he said.
The UNDP report says an emergency cash transfer operation, costing about $250 million a month, would cover partial income losses for 2.6 million people who are expected to fall into poverty. A more ambitious temporary basic income program to provide $5.50 a day per person would cost $430 million a month.
Ukraine’s economy is expected to contract by 10% in 2022 following the Russian invasion, but the outlook could deteriorate sharply if the conflict lasts longer, the IMF said in a staff report released on Monday.
The World Bank on Monday approved nearly $200 million in additional and reprogrammed financing to bolster Ukraine’s support for vulnerable people. The funding comes on top of the $723 million approved last week and is part of a $3 billion package of support the World Bank is rushing to provide to Ukraine and its people in the weeks to come. to come.
Steiner stressed Ukraine’s importance to the economies of other nations, particularly a group of African nations that he said get a third of their wheat supplies from Ukraine and Russia.
“We are also trying to stabilize an economy which is for 45 African countries, the least developed countries, their breadbasket,” Steiner said.
(Reporting by Stephanie Nebehay; Editing by Frank Jack Daniel)