The 2025 state budget is short almost $15 billion for civilian needs.
This was announced on August 27 by Prime Minister Denys Shmyhal at the forum “Ukraine 2024. Independence”.
Ukraine already knows how to get $20 billion of them. However, the remaining $15 billion will have to be found either in domestic sources, or by finalizing agreements with partners, or in the $50 billion confiscated from Russian assets,
Let us recall that civil expenditures of the state budget are financed through foreign financial aid.
Participants in the discussion reported that the need for external financing for 2025 will increase by $12-15 billion and will amount to about $35 billion. “How much money does Ukraine lack? Budget deficit, assistance from partners and prospects for 2025” (this is a project of the Center for Economic Strategy).
Deputy Minister of Finance Olga Zykova spoke about potential sources of funding:
First of all, this is income from donors. By 2025, there are already commitments from the EU in the amount of about €12.5 billion and an IMF program, which is about $1.8 billion. The rest of the funding is the subject of negotiations, which also consider the use of $50 billion in revenue from Russian assets.
Secretary of the Rada Budget Committee Volodymyr Tsabal on alternative measures to counteract tax increases:
Where can we attract additional funds if we do not raise taxes? The first area is energy. The cost of utilities is significantly lower than potential market prices. As a result, both those who can pay the market price and those who cannot, in fact, pay the same amount, which does not correspond to the real market price.
The second direction is to increase funding for the security and defense sector from local budgets. We have already partially done this by redirecting military personal income tax to security and defense.
The third is tax compliance. A significant portion of taxpayers do not pay the taxes they owe. One example is pseudo-FOPs. The main question is how to effectively control these processes.”
Leading economist at Dragon Capital Elena Bilan on the likely impact of tax increases on citizens and businesses:
It is difficult to assess the impact of the proposed fiscal measures on the economy because, firstly, they are not yet in their final version, and secondly, this will probably be the first such large-scale change in taxation in the history of Ukraine. But we can say with confidence that if we tax only those who pay taxes, this will affect their income, the purchasing power of households. If we suppress this domestic consumption next year with taxes, then the issue will be a source of economic growth.
Source: Racurs
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.