12 Jan 2024 14:52

Ukrainian budget needs to be reviewed less often and less extensively this year than in 2023 - NBU dep governor

MOSCOW. Jan 12 (Interfax) - Military expenditures are fairly substantial in Ukraine's 2024 state budget, but still lower than in 2023, probably because they are spread across several items, and it is impossible to compare the same items between two budgets, National Bank of Ukraine Deputy Governor Sergei Nikolaichuk said in an interview with Ukrainian media.

"So I think this year's budget is fairly realistic from the outset, especially where military spending is concerned, and it will need to be reviewed much less often and less extensively than the 2023 budget," he said.

Nikolaichuk said that if negative factors like a widening of the deficit or a reduction in tranches of financial assistance from partners were to affect the 2024 budget, then the situation ought to be resolved by fiscal means rather than monetary financing, as this is socially more just and keeps the economy manageable.

He said adjustment by weakening monetary policy with monetary financing would have significant social repercussions, which could seriously undermine the economy's defense capability and potential.

"Not without reason does the Memorandum with the IMF envisage monetary financing to respond to risks that have materialized as a last resort when all other possibilities have been exhausted," he said.

Ukraine's parliament has passed a 2024 budget with a deficit of UAH 1.57 trillion or 20.6% of forecast GDP. Budget revenues are expected to total UAH 1.77 trillion, not including potential financial assistance, and spending UAH 3.36 trillion at an average exchange rate of UAH 40.7/$1.

Budget revenue was UAH 2.67 trillion in 2023, according to preliminary data, including UAH 0.43 trillion of assistance. Spending exceeded UAH 4 trillion and the deficit was UAH 1.33 trillion at an average exchange rate around UAH 36.6/$1.

Alexander Parashchy, head of the analytical department at Concorde Capital, and Alexei Sivirin, a partner at the Saturday Team research company, estimate the 2024 budget will need up to $20 billion of additional financing.