Finance Ministry elaborates on main indicators of 2021 national budget draft

Ukrainian Finance Minister Serhiy Marchenko says the draft national budget for 2021, which was approved by the Cabinet of Ministers on September 14, 2020, provides for revenue at UAH 1.071 trillion (US$38.4 billion), while spending at UAH 1.35 trillion (US$48.4 billion).

The budget deficit is capped at UAH 270 billion (US$9.7 billion), he said at a briefing on Monday, as reported by an UNIAN correspondent.

Read alsoGov't endorses 2021 budget draft submitted by finance ministry

The 2021 national budget draft is realistic and balanced, the official says.

Realistic budget

"The budget is balanced and realistic, it provides opportunities for development. Therefore, it is titled 'The Budget for Development Opportunities,'" Marchenko said.

"The budget is balanced and realistic, it provides opportunities for development."

Budget deficit

"We have reduced the deficit by 1.5% against this year's deficit at 7.5% of GDP. The indicator is expected to fall to 6% of GDP next year. We would like to ensure a normal cycle when we are minimally dependent on borrowings," the minister said.

Revenue growth

The draft law on the national budget provides for a 9.4% increase in revenue and a 5.1% rise in spending. Marchenko says the government does not propose any increase in the burden on businesses amid the crisis, thus there will be "no significant rise in tax revenue."

"Therefore, the redistribution of GDP through the national budget revenue is gradually decreasing to 23.5%. This is less than this year. We will do this by increasing the efficiency of VAT, both domestic and import ones. As this year shows, there are quite significant opportunities for deshadowing [of the economy], for working with scheme-based loans, tax minimization, and so on. Therefore, the main increase in revenue will be on these taxes," he said.

Average salary

"The main macroeconomic indicators on which the draft state budget was developed have not changed. This is a 4.6% GDP growth, a 7.3% inflation, and an average monthly salary set at UAH 13,600 [US$487]," he said, adding that the document projects the hryvnia's average annual rate at UAH 29.1 per U.S. dollar.

State budget for 2021: Background

• On September 14, 2020, Ukraine's Finance Ministry forwarded the draft national budget for 2021 to the government for consideration.
• On the same day, the Cabinet of Ministers supported the 2021 national budget draft submitted by the Finance Ministry.
• Ukrainian Prime Minister Denys Shmyhal said the Cabinet would table a draft law on the 2021 national budget of Ukraine at the parliament on September 15. According to Shmyhal, the rate of the national currency, the hryvnia, is set at UAH 29 against the U.S. dollar, while the deficit is laid down at 6%.
• On August 31, envoy of the Cabinet of Ministers to the Verkhovna Rada Vasyl Mokan said the government would submit Ukraine's draft national budget to parliament before September 15.
• On August 29, 2020, Ukrainian President Volodymyr Zelensky signed into law Bill No 822-IX passed by the Verkhovna Rada at its special session on August 25 to amend the law on the 2020 national budget of Ukraine.
• On August 6, Zelensky initiated amendments to the national budget to raise the minimum wage to UAH 5,000 (US$179) from September 1, 2020.
• The minimum wage in Ukraine from January 1, 2020, increased by UAH 550 (US$19.71), to UAH 4,723 (US$169) per month, or UAH 28.31 (US$1.01) per hour.