Assisting Ukraine in War: Loans with Repayment based on GDP Growth

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F61989100%3A27510%2F25%3A10259936" target="_blank" >RIV/61989100:27510/25:10259936 - isvavai.cz</a>
Result on the web
<a href="https://www.world-economics-journal.com/Papers/Assisting-Ukraine-in-War.aspx" target="_blank" >https://www.world-economics-journal.com/Papers/Assisting-Ukraine-in-War.aspx</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.26181/29552105" target="_blank" >10.26181/29552105</a>

Result language
angličtina
Original language name
Assisting Ukraine in War: Loans with Repayment based on GDP Growth
Original language description
The paper proposes GDP-contingent loans (GCLs) as a novel war-financing mechanism for Ukraine, linking repayments to economic performance (e.g., real GDP growth) and thus balancing donor burden and sustainable repayment. GCLs are inspired by income-contingent loans used in higher education; featuring a repayment-free threshold (e.g., pre-war GDP levels) and repayments as a proportion of each year’s GDP growth (e.g., 35% or 50%). Simulations comparing GCLs and standard loans (SLs) under Ukraine’s context (e.g., $100 billion loan, 2025–2045) show GCLs prevent debt traps and stagnation by pausing repayments during recessions and pre-recovery phases, unlike SLs, which impose fixed burdens regardless of economic conditions. Incorporating fiscal multipliers highlights GCLs’ superiority, as SLs’ early repayments reduce GDP growth (e.g., $232 billion by 2049 vs. $301 billion under GCLs), while GCLs’ countercyclical design supports recovery. Our analysis suggests that a GCL is a valuable debt-management instrument that would benefit both lenders and Ukraine (or any crisis-struck country); offering lower default risk, better income smoothing, and greater political acceptability.
Czech name
—
Czech description
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Type
J<sub>SC</sub> - Article in a specialist periodical, which is included in the SCOPUS database
CEP classification
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OECD FORD branch
50202 - Applied Economics, Econometrics

Project
<a href="/en/project/GA25-17638S" target="_blank" >GA25-17638S: Geopolitical Risks, Pandemics and Macro-Financial Stability</a><br>
Continuities
P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)

Publication year
2025
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

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