3 Nov 2022 16:07

Ukraine's Verkhovna Rada adopts 2023 state budget

MOSCOW. Nov 3 (Interfax) - The Verkhovna Rada has endorsed the law on the Ukrainian state budget for 2023, MP Yaroslav Zheleznyak (Golos faction) said.

"The parliament adopted the State Budget for 2023 in the second reading and as a whole," Zheleznyak was quoted by Ukrainian media as saying in a statement on social media on Thursday.

The budget for next year was supported by 295 deputies, with 35 abstaining and no one voting against, he said.

"Now we hope that our international partners will appreciate our punctuality and fully fund the budgeted $38 billion deficit," Zheleznyak said.

As previously reported, the Budget Committee proposed an increase of UAH 120 million to cover the activities of the Verkhovna Rada, UAH 96.56 million for parliamentary supervision of constitutional rights and freedoms, UAH 519.39 million for financing the statutory activities of political parties and UAH 38.5 million for measures associated with the privatization of public property.

Additionally, it was proposed to allocate an additional UAH 62.76 million to the Specialized Anti-Corruption Prosecutor's Office and UAH 16.38 million to the National Agency for the Prevention of Corruption, all of this by cutting the Reserve Fund.

The Budget Committee noted that the finalized draft state budget for the second reading increased the revenue by UAH 50.1 billion (or by 3.9%), including for the general fund by UAH 26.5 billion, while the expenditures were increased by UAH 66.8 billion (or by 2.7%), including UAH 43.2 billion for the general fund.

Additionally, the general fund deficit was expanded by UAH 16.7 billion (or by 1.3%) due to the same additional drawing of external financing - in total up to UAH 1.443 trillion. "Thus, the cap on the state budget deficit is proposed to be set at 20.6% of the projected GDP (increased by 0.6 percentage points compared to the bill submitted for the first reading)," the committee said, noting the substantial risks of shortfall in these borrowings.

As the MPs noted, the ceiling on the public debt at the end of 2023 was raised accordingly to UAH 6.423 trillion, which is 102.3% of the projected GDP (2.2 percentage points up from the bill submitted for the first reading).

When elaborating the draft state budget for 2023 for the second reading, the forecast GDP growth rate was lowered to 3.2% from 4.6% and the inflation rate to 28% from 30%. As a result, the updated forecast of the nominal GDP amounts to UAH 6.279 trillion instead of UAH 6.399 trillion.

"At the same time, the explanatory note to the finalized bill notes that more optimistic expectations of financial support from international partners, which will help maintain the balance of payments, caused the adjustment of projections for the exchange rate of hryvnia to the U.S. dollar at the end of 2023 at 45.8 UAH/$1 (previous forecast - 50 UAH/$1), while its annual average value remains unchanged (forecast - 42.2 UAH/$1)," the committee said.

He added that the forecast of funds transferred by the NBU has been increased by UAH 51.6 billion and it is envisaged that such funds will be transferred by 50% to the general and special funds, while in the bill submitted for the first reading - in full to the special fund. This rise allowed for an additional 16.1 billion UAH to be allocated to the Crisis Relief Fund, which was raised to 35.5 billion UAH.

The committee identified the following major changes for the second reading: an increase of spending on pensions by UAH 38.9 billion; production and broadcasts of television and radio programs for state needs - by UAH 1.4 billion; judiciary - by UAH 1.3 billion (including State Judicial Administration - by UAH 1.1 billion, the Supreme Court - by UAH 245.4 million, the High Council of Justice - by UAH 25.5 million), and also an increase of transfers to local budgets - by UAH 2.519 billion, mainly for social and economic development.

The total revenue in the 2023 draft state budget finalized by the government for the second reading amounts to UAH 1.329 trillion, including UAH 1.173 trillion for the general fund, and the expenditures total UAH 2.581 trillion, including UAH 2.297 trillion for the general fund, the deficit ceiling is UAH 1.297 trillion, including UAH 1.125 trillion for the general fund.

The subsistence level is set at UAH 2,589 and the minimum wage at UAH 6,700.