Ukraine will manage to finance 2023 budget deficit without printing money - NBU chief

MOSCOW. March 17 (Interfax) - Ukraine is still not planning monetary financing of the state budget deficit in 2023, despite the government's plans to increase the deficit by UAH419.3 billion, Ukrainian media reported, citing National Bank of Ukraine (NBU) Governor Andrei Pyshny.

"We are determined, and we have a common position on this with our partners from the International Monetary Fund and the Finance Ministry of Ukraine, to prevent monetization of the budget deficit in 2023. Monetary sources must be replaced with those sources that are currently being developed in terms of their accessibility," Pyshny said Thursday in a briefing that was posted on YouTube.

These sources could include activating the domestic borrowing market and maximizing the potential it has thanks to existing liquidity in the system, as well as the results of the work that the IMF and Ukrainian government are now doing to raise international financing and assistance, he said.

"We expect that, thanks to these two sources, as well as the fiscal consolidation measures that the government and Finance Ministry will carry out, we will be able to finance the budget without such monetary sources even taking into account those additional expenditures," Pyshny said.

The Ukrainian government submitted a bill to parliament this week to raise state budget spending in 2023 by UAH537.2 billion, including UAH518.2 billion on national security and defense, which will increase the deficit by UAH419.2 billion.

In order to finance the extra spending, there are plans to increase foreign and domestic borrowing by UAH180.6 billion and UAH271.3 billion, respectively.

The initially approved state budget for 2023 targeted revenues of UAH1.329 trillion, spending of UAH2.581 trillion and a deficit of UAH1.297 trillion, or 20.6% of forecast GDP. The deficit is expected to be financed almost completely with foreign borrowing in the amount of $38 billion.

The official exchange rate was UAH36.57/$1 on March 16.