UKRAINE FINANCIAL COMMISSION INTERMEDIARY

Cabinet promises. GDP, forex rate, and wages outlook for next three years

The Cabinet of Ministers of Ukraine, whose action program has not been adopted to this day, has nevertheless, approved the forecast for the development of the country's economic and social policies for the next three years. This covers the minimum wage, according to which fines and social assistance are calculated, as well as pensions, average wage, and the hryvnia exchange rate. That is, the Cabinet of Ministers released an outlook for Ukrainians' wellbeing. Future state budgets, at least the one for 2021, will be drafted in line with this audit, which the finance ministry has already announced. The budgetary process has already begun. The ministry believes that "the updated macro forecast for 2021 is quite realistic, and takes into account the latest trends in economic development, the realities that have developed in world markets as a result of the COVID-19 pandemic, and current assessments of the prospects for the global economic recovery." The Ministry of Finance also said that "a letter is already being prepared to the main managers for preparing budget applications. Further, they will be processed and conciliatory meetings will be held". And in early September, as stated in the Budget Code, the Ministry of Finance will submit to the Cabinet a draft state budget for 2021. Also, the Ministry of Finance claims that everything is just fine in the country. "For example, according to the current budget, since May, we have fully met budget revenue targets, while even exceeding them in June. And now it's the end of July – we also expect that the revenues of the state budget's general fund will be overfulfilled by more than UAH 4 billion. All this is the result of the changes we have introduced in the country's fiscal system: we are effectively fighting against shadow schemes, ensuring additional revenues to the budget," said Finance Minister Serhiy Marchenko. Here we can argue with him, at least if we take into account the data released by the Accounts Chamber. According to the report, Ukraine's budget deficit for the first half of the year amounted to more than UAH 38 billion, which was an absolute low over recent years. "Analysis of Treasury's operational reporting showed that for a few months in a row the amount of income shortfalls remains significant. In January-June 2020, the revenue target of the state budget's general fund fell short of UAH 38.4 billion, or 7.8%," said Valeriy Patskan, the Accounts Chamber Head. By the way, in early April, the Verkhovna Rada adopted changes to the 2020 state budget in connection with the coronavirus pandemic. Therefore, state treasury revenues are already planned in the amount of UAH 975.8 billion (that is, they will decrease by UAH 119.74 billion), expenditures are laid down at UAH 1.266 trillion (increased by UAH 82.39 billion), while budget deficit was increased more than threefold – from UAH 96.27 billion to UAH 298.4 billion. Now the Cabinet of Ministers has adopted a plan for Ukraine economy's development for the next three years.

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