Ukraine won't default but financial situation is 'dire,' warns EU ambassador to Kyiv

euronews.com:

Ukraine is not likely to default on its foreign debt, but the financial situation inside the war-torn country is 'dire' and requires urgent foreign aid to make up for a monthly budget shortfall worth €5 billion, the EU's ambassador to the country has warned.

The funds are needed to keep the economy afloat and pay for pensions, salaries and basic public services, all the while Russian forces march ahead with their brutal invasion.

"International financial assistance is coming from different sources. But it's not enough yet to bridge that gap," Ambassador Matti Maasikas told Euronews during a recent visit to Brussels.

Last week, EU countries agreed to release the first €1 billion tranche of the €9 billion package of financial aid that the bloc promised in May.

Member states are yet to reach an agreement on the remaining €8 billion.

The money is raised by the European Commission on the capital markets and is then being disbursed to Kyiv in the form of long-term, favourable loans.

The interest costs arising from the transaction will be directly covered by the EU budget.

Italian newspaper Corriere Della Sera has reported that Germany is blocking the assistance because it entails the issuance of fresh common EU debt.

A spokesperson from Germany's permanent representation to the EU did not comment on the media reports. Officials in Brussels have not confirmed the funding block but said discussions about additional guarantees were still ongoing among capitals.

"The decision on the rest is awaited. The budget gap is a reality," Maasikas said. "I can only express my hope that the discussions amongst EU member states would proceed more quickly."

Asked about the possibility of Ukraine defaulting on the loans, the Ambassador said the