Despite the war, deposit volumes and the number of business loans have increased in Ukraine, according to a YouControl analyst
15 April 13:09
YOUTUBE
Contrary to predictions of hyperinflation and the collapse of the banking system, Ukraine is setting a unique global precedent: in the fourth year of the war, hryvnia-denominated lending has increased by a third. YouControl analyst and Doctor of Economics Roman Kornilyuk explained in an interview with "Komersant Ukrainian" how this foundation works and why public confidence in the hryvnia has become stronger than the fear of shelling.
Macrofinancial stability: Is a repeat of the “1990s” looming?
The expert cites the uninterrupted functioning of the financial system as the main trend of recent years. Unlike the crises of past decades, payments now continue without interruption. Any individual or legal entity can freely make payments both in cash and electronically.
“Despite the fourth year of war and despite the shocks, we are achieving macrofinancial stability. This is evident in the fact that payments do not stop. This is the foundation that keeps us afloat,” emphasizes Roman Korniyuk.
The most unexpected indicator was the growth in lending and deposits. According to the analyst, if total despair prevailed in society, we would have witnessed a mass exodus of depositors. Instead, the trend is the opposite.
- Lending: The volume of hryvnia-denominated business loans increased by a third over the past year.
- Deposits and Government Bonds: The public isn’t just keeping money in banks; they’re actively investing in government bonds (OVDP). This indicates that Ukrainians believe in their country’s solvency.
“If people didn’t trust the state or the banking system at all, we would see an outflow of depositors, and no one would buy government securities. But we’re seeing the opposite trend,” says Kornilyuk.
Where to get “another GDP”? Historical parallels and hybrid financing
Any total war requires the mobilization of resources that are effectively equivalent to another annual national budget. Roman Kornilyuk draws a parallel with England’s war against France several centuries ago, when the Bank of England issued bonds to raise capital from the wealthiest individuals. Ukraine today uses a similar but “hybrid” method.
- Donors and Partners: The bulk of expenditures is covered by the EU (currently a priority), the U.S., Japan, and other allies.
- Grants vs. Loans: The expert urges people not to fear the “debt burden.” A significant portion of the aid consists of grants, while loans come with favorable terms and the option for extension.
“Any war requires enormous additional resources. For us, this amounts to another GDP. We’ve adopted this hybrid approach… But when the IMF loan cycle ends, we use a new program to cover payments on the old one. If this happens gradually and continues—it’s not an extraordinary debt burden,” the analyst explains.
Drivers and Risks
According to YouControl data, the main growth drivers will be sectors that have been able to adapt to wartime conditions:
- Machinery Manufacturing (Defense Industry): The sector has delivered results that were previously “unthinkable.”
- Energy: Despite the blows, it remains the leader in revenue and is becoming decentralized.
- Banking sector: It will remain an “oasis of stability,” ensuring the economy’s blood circulation.
At the same time, Roman Kornilyuk calls the scenario in which Ukraine might repeat Cuba’s fate after the collapse of the USSR (when the cessation of support led to tragedy) “clickbait and catastrophic.” Such an analogy is misleading. Unlike Cuba, which was merely an external pawn in someone else’s game, Ukraine is an integral part of the European body.
“We have been part of Europe since the days of Kievan Rus’… Europe is our home, in essence. It is our homeland just as much as it is in a broader sense. Therefore, we must integrate into this environment and defend Europe just as we defend our own country. And Europe’s success is our success. And Europe’s failure is our failure,” Roman Kornilyuk is convinced.
The analyst emphasizes: while for Cuba the sudden loss of support from the USSR was a tragedy due to the artificial nature of their ties, for Ukraine the European path is the only option because of shared values and history. We are not merely “tools” used by the world to wage war, but an integral part of a home whose well-being directly depends on the stability of the entire European continent.
