The United Nations Development Programme (UNDP) warned on Wednesday that if the war continues for another year, 90% Ukrainians might be pushed into poverty, wiping out two decades of economic achievements.
UNDP Administrator Achim Steiner told Reuters that his organization was working with the Kyiv administration to avoid a worst-case scenario of the economy failing, and that he planned to send cash transfers to families to help them buy food and other necessities rather than emigrate.
The World Bank has stepped in to help by giving roughly $200 million in new and repurposed funding to Ukraine’s social services for the most vulnerable.
The overall amount of assistance provided by the World Bank to Ukraine is estimated to be around $925 million.
Achim Steiner, UNDP Administrator said, “If the conflict is a protracted one, if it were to continue, we are going to see poverty rates escalate very significantly”.
Steiner told Reuter that 90% of the population would be below the poverty line “Clearly the extreme end of the scenario is an implosion of the economy as a whole. And that could ultimately lead to up to 90 per cent of people either being below the poverty line or being at high risk of (poverty),” he said.
The poverty line is generally defined as the purchasing power of $5.50 per person per day, he added in a video interview from New York. Before Russia launched its invasion on February 24, the poverty rate in Ukraine was estimated at 2 per cent, he said.
“We estimate that up to 18 years of development gains of Ukraine could be simply be wiped out in a matter of 12 to 18 months,” Steiner said.
UNDP is looking at “tried and tested” programmes that it has used in other conflict situations, he said.
“Cash transfers programmes, particularly in a country such as Ukraine where the financial system and architecture is still functional, where ATMs are available, a critical way in which to reach people quickly, is with cash transfers or a temporary basic income,” he said.
Some of the recent pronouncements by the World Bank and the International Monetary Fund in terms of credit lines and funding will undoubtedly aid Ukrainian authorities in their ability to implement such a scheme.
According to the UNDP estimate, a $250 million per month emergency cash transfer operation would cover partial income losses for 2.6 million individuals who are likely to slip into poverty.
According to initial estimates, a more ambitious temporary basic income program providing $5.50 per day per individual would cost $430 million per month.
Ukraine’s economy is anticipated to collapse by 10% in 2022 as a result of Russia’s invasion, but the situation could deteriorate rapidly if the conflict continues, according to a staff assessment released on Monday by the International Monetary Fund.