Analysis of changes in Ukraine's state budget 2020

Author : Danylo Monin

Source : 112 Ukraine

The budget is presented with economic growth of 3.7% of GDP
17:06, 11 November 2019

Mirror Weekly

I think you may already have heard about the 2020 budget key positions. I’ll try to give the main points and questions that I have, based on my detailed analysis of the changes in the budget for the second reading.

  1. The Ministry of Finance has made a correction of tax revenues for the second reading. For the first time, I see that the correction in terms of revenue items was carried out in a negative direction. The total revenue of the state budget for tax revenues increased by only 40 million USD.
  2. The second version of the budget proposes two new revenue items - rental income (amber) - 22 million USD and gambling licenses (in non-tax revenues), from the legalization of which the Ministry of Finance is ready to receive 122 million USD.

For me, the figure of 122 million USD looks extremely overstated, unless, of course, the Cabinet of Ministers has agreed with the big players in the gambling business in advance, because reading the bill and its harsh conditions for starting work, it is unlikely to attract at least 1 billion.

  1. On non-tax revenues, revenues increased by 547 million USD. The main change is the change in dividends of state enterprises.
  2. Financing the budget deficit has changed. The borrowing plan has been reduced (adjusted) by 734 million USD, the loan body payment plan has been reduced by 408 million. The Ministry of Finance on external debts needs to pay off 4.5 billion USD of the loan body. The Ministry of Finance wants to take about 5 billion USD of new debts to pay them off.
  3. As I expected, despite the prime minister’s statements that a completely new budget will be presented in the second version, this did not happen. Due to the fact that the most powerful budget correction was made already at the first reading when several ministries were united, some of the dubious programs were cut, and in general, a course was taken to tightly optimize the budget expenditures.

In the second version of the budget, the Cabinet continued to move departments. So, the State Statistics Service became subordinate to the Cabinet of Minister's secretariat with the Ministry of Economy.

Television and radio with public TV UA-1 were subordinated to the Ministry of Culture, Youth and Sports, the Agency for Forest Resources and Water Management was moved from the Ministry of Economy to the Ministry of Energy and Environmental Protection, and the labor agency moved to the Ministry of Economy. And the total expenditure increased by only 408 million.

  1. Poroshenko has created two new agencies on state language standards for 2 million USD. The second version of the budget took it into account.
  2. The Interior Ministry got 367 million USD, the army gets 571 million USD.
  3. The budget also predicts 40 million USD for the construction of the airport.
  4. Despite the statements of the authorities to reduce 18 thousand officials of the local district administrations, this is not yet reflected in the budget. The budget remained at the same level.

These numbers provoke some questions:

  1. How about land reform? The Cabinet of Ministers returned the old agro-industrial programs in the second reading and liquidated the article on concessional lending to land purchases by farmers.
  2. How about the census? The budget expenditures for the census were sharply reduced from 138 million to 57 million USD. And according to rumors, it was postponed to November-December next year.
  3. Zero declaration? Zelensky promised to launch a zero declaration to business. Bill No. 1232 was developed with the launch of the declaration at the beginning of 2020. Bill No. 1232 was developed with the launch of the declaration at the beginning of 2020, but no additional income appeared in the budget. Does this mean a rejection of campaign promises or not?
  4. Economic growth? This is perhaps the most important question. The budget is presented with economic growth of 3.7% of GDP. At the same time, the Ministry of Finance refers, they say, so the macro forecast is made.
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