Speech by NBU Deputy Governor Sergiy Nikolaychuk at Economic and Financial Dialogue between EU and Western Balkans, Türkiye, Georgia, Republic of Moldova, and Ukraine

Dear colleagues,

It is an honor to address this distinguished gathering, as Ukraine is participating in this high-level Dialogue for the first time. We are grateful for the chance to engage more with our European partners. We appreciate the EU’s unwavering support in these challenging times.

Together, we have crafted the Ukraine Facility, a comprehensive and ambitious instrument aimed at supporting Ukraine’s development and facilitating our recovery from the consequences of russian aggression.

February 2022 marked a profound shift in our global landscape and reality

Each nation participating in this Dialogue has experienced the direct economic repercussions of that shift.

Addressing the challenges posed by russia’s full-scale aggression is undoubtedly a daunting task. Yet, history has shown that Europe can withstand even the gravest difficulties through decisive and collective action. Implementation of appropriate policies can help achieve a stable economic adjustment and enhance medium-term growth prospects.

However, in today’s global context, Europe remains vulnerable to significant security risks

The era of complacency and peace dividends has conclusively ended. As Josep Borrell, EU High Representative for Foreign Affairs and Security Policy, said, “A high-intensity, conventional war in Europe is no longer a fantasy.”

It is imperative to acknowledge these risks, as they carry substantial consequences.

Historically, the world overlooked russia’s aggression against Georgia in 2008. Similarly, the response to russia’s aggression against Ukraine during 2014–2015 was ultimately weak and failed to halt further aggression, despite sanctions. The events of 2022 should serve as a critical lesson on the inadequacy of our previous countermeasures.

Fortunately, now the EU is adapting to this new reality. As President of the European Council Charles Michel said, “If we do not formulate an appropriate response by the EU, and fail to provide sufficient support to Ukraine to stop Russia, we risk becoming the next target. We must therefore be defense-ready and transition to a "war economy" mode. If we desire peace, we must prepare for war.”

Along with adapting to this new reality, one of the most effective ways to mitigate such risks is by continuing to support Ukraine

Denying the aggressor the opportunity to achieve its objectives – breaking Ukraine and distancing it from the EU – significantly diminishes the likelihood of war scenarios occurring, not just on our continent but globally.

In this context, we extend our gratitude to the EU and its member states for the progress on the issue of utilizing windfall revenues from the immobilized russian assets in favor of Ukraine. However, it is crucial to maintain the efforts to seize immobilized assets as an adequate countermeasure against russian aggression. The risks posed to the European and global financial system from the seizure are considerably lower than those presented by escalating security threats.

Further sanctions pressure and efforts to scale down the operations of European banks and corporates in russia, thus diminishing its economic and military potential, are also of a great importance.

At the same time, Ukraine aligns with the EU’s strategic goals and has made significant progress in numerous areas despite the ongoing full-scale war

Thanks to international support and prudent policies, we continue to ensure macroeconomic and financial stability and lay the groundwork for an economic rebound even amid the full-scale war.

Last year, we were able to bring inflation down to our 5% target and continue to keep it close to that level, setting the stage for easing our monetary policy and capital controls.

Our banking sector remains sound, well capitalized, and liquid, meaning it is well suited to support the real sector by reviving lending.

GDP rebounded by 5.3% in 2023 after contracting by 29% in 2022. This year, we project further growth by 3%–4%. 

We aspire to build a prosperous nation with an innovative economy, a liberal market, efficient public institutions, advanced digital governance, robust civil society, and deep-rooted democratic traditions.

In medium-term, we seek to emulate the success of our neighbors from Central and Eastern Europe, who have been key drivers of the EU’s economic growth over the last two decades.

Thank you for your attention and continued support as we work together towards a more secure and prosperous Europe.