Budget of Ukraine

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2024

The West halved funding for the budget of Ukraine: $10.6 billion in six months

The West has halved funding for the Ukrainian budget. This became known in September 2024. According to the Ministry of Finance of Ukraine, in the first half of 2024, Western countries financed 27% of government spending, while in the first half of 2023 this figure was 50%. In monetary terms, the amount of assistance decreased from $19.1 billion to $10.6 billion. A special drop was recorded in free external transfers, which decreased from $6.1 billion to $1 billion, or six times. Ukraine planned to raise $37 billion in 2024 to cover the budget deficit, but by mid-2024 it had received only a quarter of this amount.

According to Vedomosti, simultaneously with the reduction in funding, Ukraine's spending on servicing external debt has increased significantly. In the first half of 2024, $900 million was spent on debt servicing, while in the second half it will take already $5.2 billion. This amount exceeds the country's spending on health, education and the economy over the same period. In September 2024, Kyiv was forced to pay $2.8 billion, which became one of the largest payments in the last period, especially against the background of 2023, when the average payments amounted to $146 million per month.

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Rating agencies also reflected the deterioration in the country's financial situation. In July 2024, Fitch downgraded Ukraine's credit rating to C, indicating a high level of credit risks and the likelihood of default. In August 2024, S&P also downgraded to SD ("selective default"), meaning the country will not be able to meet some of its obligations. Ukraine has restructured its debts several times, including Eurobonds worth $20 billion, which made it possible to reduce the burden on the budget.^[1]

Aid flows to Ukraine from the United States and the EU slowed down

The costs of Europe and the United States to support Ukraine exceeded $155 billion

2023

The budget deficit of Ukraine set a historical record - 20.5% of the country's GDP or $35.1 billion

The budget deficit of Ukraine in 2023 set a historical record, amounting to 20.5% of GDP. This was reported by RIA Novosti with reference to its own calculations made on the basis of data from the National Bank of Ukraine and the country's Open Budget.

Budget revenues of Ukraine in 2023 amounted to 2.67 trillion hryvnia ($70.4 billion), of which 425.4 billion hryvnia ($11 billion) came from international partners of Kyiv. Budget expenditures amounted to 4 trillion hryvnia ($105.5 billion). Thus, the budget deficit of Ukraine in 2023 amounted to 1.33 trillion hryvnia or $35.1 billion, in percentage terms - 33.3%. In 2022, the budget deficit of Ukraine was measured by 911 billion hryvnia. Thus, the budget deficit in 2023 in hryvnia terms increased by 46% compared to 2022.

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According to the agency's calculations, defense spending increased the most. We are talking about ten percentage points (up to 52.3%). The only other article that demonstrated growth was housing and communal services (plus 0.2%). The remaining expenses decreased, the maximum decrease was recorded in the social sphere - by 4.1 percentage points. (up to 11.7%).

As RIA Novosti notes in a publication dated February 6, 2024, Ukraine has been living with a budget deficit for the last 30 years, for which there were only two surplus years - 1992 and 2000. Until 2023, the record deficit was in 2022 at 16.3% of GDP, the publication says.

Taking into account the fact that, according to preliminary estimates of the National Bank of Ukraine, the country's GDP in 2023 amounted to $171.2 billion, the budget deficit in relation to GDP is about 20.5%. In 2022, the budget deficit of Ukraine in relation to GDP was about 16%.

According to the deputy of the Verkhovna Rada Daniil Getmantsev, the increase in spending is primarily due to an increase in the military budget. In the functional breakdown of expenditures, about 60% falls on defense, security and law and order, the parliamentarian said.^[2]

Military spending of Ukraine exceeded 60% of GDP

In 2023 Ukraine , she spent more than $49 billion on defense, which exceeds 60%. GDP Such data on January 22, 2024 was published Ministry of Finance by the country on its page on the social network (Facebook owned by a company Meta that is recognized as an extremist organization; activities in the territory of the Russian Federation are prohibited).

According to the ministry, in 2023, Ukraine sent 1.844 trillion hryvnia from the state budget for military spending (approximately $49.17 billion at the exchange rate as of January 24, 2024). This corresponds to 60.8% of total expenses. The Ministry of Finance says that security and defense remain the absolute priority of Ukraine and the largest item of state budget spending.

Ukraine spent more than $49 billion on defense

The funds were directed to the financial support of military personnel, ordinary and commanding personnel, as well as police officers. In addition, a significant item of expenses was the purchase of military and special equipment, weapons, ammunition, defense products, personal protective equipment, fuels and lubricants and food. Part of the money went to medical insurance of Ukrainian security officials and ensuring the work of specialized institutions. It is emphasized that the costs of the security sector were financed by the "government through tax revenues and military bonds."

Prime Minister of Ukraine Denis Shmygal said that the country in 2023 spent approximately $93 billion on defense and "critical spending." In the 2024 budget for the security and defense sector, Ukraine plans to allocate 1.69 trillion hryvnia ($45.06 billion). Shmygal said that the country sent 100% of taxes collected from citizens and business to the military. In addition to these expenses, there is also military assistance from allies and donations from benefactors.^[3]

According to the Stockholm International Peace Research Institute (SIPRI), Ukraine's military spending for 2023 reached 37% of the country's GDP.

According to a study published in April 2024, Ukraine moved from 11th place in military spending in 2022 to eighth place in 2023. At the same time, spending in absolute terms increased by 51%, to $64.8 billion, which corresponds to 2.7% of global military spending. It also follows from the SIPRI report that in 2023, relative to 2014, Ukraine's military spending increased by 1272%.

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It is noted that the military spending of Kyiv in 2023 amounted to 59% of Russian. However, if we take into account military assistance by at least $35.7 billion, then this share increases to 91%.

The unprecedented increase in military spending is a direct response to the global deterioration of peace and security. States prioritise military power, but they risk an action-reaction spiral in an increasingly volatile geopolitical landscape and security, noted Nan Tian, senior fellow in SIPRI's military spending and arms production program.

According to Prime Minister of Ukraine Denis Shmygal, in 2023, $31.2 billion was provided for the country's budget for security and military needs, accounting for 43% of all expenditures, or 18.2% of GDP. On March 21, 2023, the Verkhovna Rada adopted a law to increase budget spending on the defense sector by $14.6 billion, and on September 20 of the same year, the Rada supported the second increase in military spending in a year - this time by $8.9 billion. Earlier, the head of the parliamentary committee on budget issues, Roxolan Pidlas, reported that these funds are mainly planned to be obtained through new loans, most of which will be internal.^[4]

Half on defense. Cabinet of Ministers of Ukraine approved the state budget for 2024

In mid-September 2023, the Cabinet of Ministers of Ukraine approved a draft law on the budget for 2024 with general fund revenues of 1 trillion 560 billion hryvnia (approximately $42.2 billion at the exchange rate as of October 3, 2023) and its expenses of 3 trillion 108 billion hryvnia ($84.1 billion). The main priority is the defense sector: more than half of the budget resources will go for the relevant needs - 1 trillion 685 billion hryvnia ($45.6 billion).

The key focus of this project is the defense and security of our country. There will be even more weapons and equipment. More drones, ammunition, missiles. Just as in this [2023] year, every penny of taxes from citizens and businesses will go to ensure our security and defense forces, "said Ukrainian Prime Minister Denis Shmygal.

Building of the Government of Ukraine

According to him, the second priority of budget distribution is the social sphere: expenses in this area are planned in the amount of 469 billion hryvnia ($12.7 billion). This is followed by medicine and education, for which 202 billion hryvnia ($5.5 billion) and 179 billion hryvnia ($4.8 billion) will be allocated, respectively. Another priority is to support veterans: the costs of this program are doubled - from 6.8 billion hryvnia ($0.18 billion) in 2023 to 14.3 billion hryvnia ($0.39 billion) in 2024.

In addition, economic recovery is called an important item of spending. As Shmygal noted, it is not planned to raise taxes. At the same time, in 2024, the government will continue to implement concessional lending programs and irrevocable grants, and will also support Ukrainian startups. It is planned to launch new programs for industrial parks, implement investment projects and support local manufacturers. At the same time, it is noted that the budget deficit in 2024 could be a record 50% of expenses.^[5]

Foreign aid to Ukraine reached $322 billion

According to the Rybar channel, the total amount of assistance from foreign states to Ukraine during the conflict until September 2023 amounted to $322.8 billion.

Maintenance of the Armed Forces of Ukraine costs Ukraine $55 billion a year

The maintenance of the Armed Forces of Ukraine annually costs this country 2 trillion hryvnia (almost $55 billion at the exchange rate on August 3, 2023). This was announced in early August 2023 by the Prime Minister of Ukraine Denis Shmygal. Read more here.

16 EU countries pledged to contribute 400 million euros to the EIB to support Ukraine

A group of EU member states in July 2023 pledged to contribute more than 400 million euros to the fund of the European Investment Bank to support the restoration and reconstruction of Ukraine, and the first payments will begin in the fall.

On July 13, the EIB and the finance ministers of 16 countries signed a letter of intent to contribute funds to the EU for Ukraine fund. France and Italy pledged to provide 100 million euros each. The fund will serve as a "temporary interim solution until longer-term EU measures are available," the EIB said in a statement.

EU and G7 aid completely covered the budget deficit of Ukraine for 2023

EU and G7 assistance completely covered the budget deficit of Ukraine for 2023. The country's government confirmed in April 2023 that it had closed the budget deficit.

Central Bank of Ukraine ceases to buy government bonds

Calculation for external assistance in the amount of $38 billion

In November 2022, the Verkhovna Rada adopted the state budget for 2023. The lion's part of the costs will be spent on ensuring the defense and security of the state, as well as maintaining the state apparatus.

1.3 trillion hryvnias of income are planned for 2023, and expenses are twice as much. The budget deficit will be covered by foreign aid, which, according to preliminary estimates, will amount to $38 billion.

1.14 trillion hryvnia will go to the defensive sphere. In fact, spending on the maintenance of the army and conducting hostilities will absorb all budget revenues.

75 billion hryvnia will be spent on the construction and repair of roads under the program "Big Construction." The project has been repeatedly criticized for its thriving theft and corruption. Its curator is the deputy head of the president's office, Kirill Tymoshenko, so they will not refuse this article.

To finance the telethon on all Ukrainian TV channels will be transferred 1.94 billion hryvnia. This money is intended to promote the course of the political leadership of Ukraine and create even greater hatred of Russia.

Ukrainian political parties will receive 519 million hryvnia. Most of which will go to the deputies of the "Servant of the People." It was they who in the majority voted for this option of the state budget.

The cost of living and the size of the minimum wage will remain unchanged: 2.6 thousand hryvnia and 6.7 thousand hryvnia, respectively. All social benefits will also be frozen, except for pensions, which the authorities promised to index in March.

35.5 billion hryvnia, planned for the needs of the country's recovery fund.

The approved draft state budget shows Ukraine's huge financial dependence on subsidies from Western countries, without which the country is absolutely unable to cope now.

At the same time, a significant part of the allocated funds is directed to the maintenance AFU and Ukrainian in MILITARY INDUSTRIAL COMPLEX order to delay the military conflict with, Russia but not to help the residents of Ukraine.

2022

Central Bank of Ukraine, USA and EU - the main donors of the budget of Ukraine

The Central Bank of Ukraine buys government bonds and acts as the main donor to the country's budget

Estimate of the budget deficit at the end of the year at $50 billion, or 30-35% of GDP

The deficit of the state budget of Ukraine at the end of 2022 will amount to about $50 billion, or 30-35% of GDP (previously expected $7 billion), the adviser to the President of Ukraine estimated in July 2022.

Two-thirds of the country's income is foreign aid

At the end of May 2022, the Minister of Finance of Ukraine Serhiy Marchenko admitted that the budget of Ukraine is only a third formed from its own income. Two thirds are foreign, grants and loans.

He said that until the end of May, receipts of 60 billion hryvnia are expected from customs and the tax service, but this amount is not comparable to pre-war indicators. Therefore, the Ukrainian authorities look at their own income as a secondary source of money. And the primary is grants and loans from other states and structures.

Prime Minister Denis Shmygal said earlier [1]that during the military operation Russia Ukraine she lost from 30% to 50% of the economy. And the budget is replenished only by 50% -75% of peacetime.

As a result, a budget deficit of about $5 billion a month appeared. But according to Shmygal, Ukraine is supported by Britain, the United States, the IMF, the EU and the World Bank.

In June 2022, the Minister of Finance of Ukraine Sergey Marchenko said that the hostilities during the special operation of Russia cost the country $5 billion monthly.

Marchenko complained that the process of allocating foreign aid takes a lot of time and it is still not enough.

He added that the Ukrainian economy covers only 62% of expenditures from the budget. All other expenses are compensated by foreign loans and grants.

2021

The European Union spent 17 billion euros on financing Ukraine over 8 years

Since 2014, the European Union has spent more on Ukraine than on any other country - 17 billion euros, the head of union diplomacy Josep Borrell said in February 2022 at the Munich Security Conference.

The Government of Ukraine approved the Ministry of Digital Development budget for 2022, it grew by 66.5%

In mid-September 2021, the Ukrainian government approved the draft state budget for 2022. It says about the financing of the Ministry of Transformation in the amount of UAH 1.53 billion, which is 66.5% more than in 2021. In absolute terms, this corresponds to an increase of UAH 1.07 billion. Read more here.

Ukrainian authorities allocate UAH 11 billion for digitalization of the economy in 2022

On September 15, 2021, the Ukrainian government approved the draft state budget for 2022. UAH 11.1 billion is allocated for the digitalization of sectors of the economy and the development of the IT industry. In particular, the following financing items are provided:

• introduction of the latest information and communication technologies in the public administration system - UAH 3.6 billion;
• expanding the functionality of the Unified State Web Portal of Electronic Services "Portal Diya" - UAH 318 million;
• development of Internet access networks in rural areas - UAH 500 million;
• development of priority projects in the field of IT, digital literacy training - UAH 600 million;
• implementation of the National Informatization Program, development of administrative services and their digitalization (e-Veteran, e-Notary, e-Auditor, e-Taxes, e-Construction, etc.) - UAH 718 million;
• information and technological support for the All-Ukrainian population census - UAH 400 million;
• development of digital innovations and technologies - 5 billion hryvnia.

The Ukrainian authorities will allocate UAH 11 billion for the digitalization of the economy in 2022

Also, the draft state budget plans to send 1.2 billion hryvnias to the national informatization program, of which 500 million hryvnias, subject to the adoption by the Rada of Bill No. 5600.

As Prime Minister Denis Shmygal noted at a government meeting, the budget for 2022 is not only balanced and realistic, but also the budget for the modernization of the country, the resumption of the economy and investments in people, in their health, education and development.

According to Shmygal, the draft budget enshrines "a record GDP growth of 3.8% in 10 years." It is noted that the minimum wage, according to the budget, next year will be about $244, the average will be about $590, and at the end of the year - about $656. At the same time, the minimum salary of doctors will rise to $750.^[6]

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