Budget 2017: How Ukraine’s Cabinet is going to split 700 billion UAH

Author : Ihor Rymskyi

Source : 112 Ukraine

The general fund revenue of budget-2017 will amount to 712 billion UAH, and the deficit of public finances should not exceed 3% of GDP
15:16, 19 September 2016

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The general fund revenue of budget-2017 will amount to 712 billion UAH, and the spending - to 790 billion UAH. According to the draft budget for the current year in the general fund, it is planned to consolidate a little more than 601 billion UAH. Taking into account local budgets treasury revenues in 2017 are expected to reach 876 billion UAH. The deficit of public finances, in the words of Prime Minister Groisman, should not exceed 3% of GDP and in absolute figures is planned to be about 78 billion GDP, also it might grow in 2017 at 3%. The deficit is traditionally planned to be covered by borrowing, so that the national debt at the end of 2017 will be about 67% of GDP, or slightly more than 1.7 trillion UAH.

Related: Groysman presents Ukraine’s 2017 state budget: Top Quotes

The head of government did not name the expected amount of inflation in the next year. According to the forecast of the Ministry of Economic Development and Trade, it should reach 8.1%.

One of the priorities of the 2017 budget, as expected, became the sphere of defense. As noted during the presentation of the Prime Minister Groisman, the project involves an increase in the defense budget by more than 10 billion UAH - up to 129 billion UAH. However, our sources in the Cabinet questioned the fact that the army will receive the full amount of this money. As expected, funding Interior Ministry and Security Service would also rise.

Related: Tymoshenko: “Ukrainian government introduces the worst budgets ever”

The increase in revenues of teachers and doctors would also increase. Scholarship foundation for the students will also be increased by 600 million UAH. At the same time, financing of some social institutions are transferred to the local budgets, in particular, vocational school are at risk.

The government announced the increase in the minimum wage and a living wage.

"December 1, 2017 the minimum wage and a living wage will amount to 1762 UAH," Groisman noted.

Related: Groysman: Defense sector, roads and decentralization of power will be priorities of state budget-2017

The growth of revenues to the treasury is planned to be partly achieved through the devaluation of the hryvnia. According to our sources in the Ministry of Finance, the average rate of hryvnia is laid at the level of 27.4 UAH / USD. At the end of the same year, the national currency, according to the Finance Ministry's forecast, may go down in value to 27.7 UAH / USD.

In addition, rising excise tax on alcohol and cigarettes might also replenish the coffers. And although the final size of the rate is not determined yet, alcohol and tobacco price to increase. As for the excise tax on gasoline, they are planning to change the pre-linked to the change hryvnia exchange rate to the euro.

Related: The seven "pillars" of Ukraine's budget for 2017

Another traditional source of revenue the state treasury will be privatization. In particular, I-II quarter it is planned to sell large state-owned power generating company "Centrenergo." We can expect that, as demonstrated by the situation with the sale of Odesa Portside Plant, the competition for this property would not be easy.

But the price of imported gas in the next year will not change significantly. The international oil prices in the next three years will fluctuate in the range of 40-50 dollars per barrel, so they will be approximately at the current level.

Related: Crimea will suffer due to state budget deficit in Russia

Another battleground will be the preservation of benefits for farmers. The Government, referring to the requirement of the IMF, intended to eliminate the special regime in the last year. As noted by one of the closest friend of President of Ukraine Petro Poroshenko, head of the Committee on Taxation and Customs Policy, Nina Yuzhanina, special regime will be canceled. Instead, farmers are offered subsidies from the state budget. Farmers are not satisfied with such a decision, and mass protests might take place this fall.

Related: In Crimea was adopted a budget for the next year

The Government is not going to eliminate the simplified taxation system for individual entrepreneurs. On the contrary, the Ministry of Finance announced plans to provide tax holidays for the small business for 5 years.

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