Finance Ministry elaborates on 2021 national budget

Ukraine's Finance Ministry has elaborated on the 2021 national budget, saying it should be balanced and focused on social issues.

To this end, the ministry held a meeting with representatives of various branches of trade unions and employers, as well as those from the Ministry for Development of Economy, Trade and Agriculture and the Social Policy Ministry. The meeting was aimed to discuss the draft national budget for 2021 and take into account the sides' proposals, the ministry's press service said on September 9.

"The national budget has not yet been finalized. Consultations are underway. At the same time, we must take into account the country's unstable economic situation. Thus, the deficit of the national budget is expected at 6% in 2021, 4.5% in 2022, and 3% in 2023. This year it is estimated at 7.5% of GDP," the press service quoted Deputy Finance Minister Roman Yermolychev as saying.

Read alsoMinimum wage, pension increased in Ukraine from Sept 1The official added the move to increase the minimum wage is an additional resource that must be taken into account in drafting the budget.

Additional costs

"Additional costs amount to about UAH 47 billion [US$1.7 billion] as the minimum wage will be increased to UAH 6,000 [US$216] from January 1, 2021, and up to UAH 6,500 [US$239] from July 1, 2021," Yermolychev said.

"All trade unions have to submit their proposals as for increased costs. The main thing for the Finance Ministry is a balanced and efficient use of budget funds. All proposals related to financing various areas are being worked out in detail, taking into account the priorities," he added.

Features of 2021 national budget

The Finance Ministry is drafting the national budget for 2021 based on the outlook of economic and social development for 2021-2024 elaborated by Ukraine's Ministry for Development of Economy, Trade, and Agriculture as part of a new forecast cycle and approved at a government meeting in July 2020.

According to the updated macroeconomic forecast, the country's gross domestic product (GDP) may increase by 4.6% in 2021. Inflation may reach 7.3% in December 2021 year-over-year (y-o-y).

The inflation rate in 2021 is expected at 8.1% on average.

The average monthly salary in Ukraine in 2021 should be UAH 13,632 (nearly US$490). Exports of Ukrainian goods are projected at US$60.175 billion in 2021, while imports are expected at US$70.591 billion.

State budget: background

• 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 for 2021 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 extraordinary session on August 25 to amend the law on the 2020 national budget of Ukraine.
• On August 6, President Zelensky initiated changes to the national budget to raise the minimum wage to UAH 5,000 (US$180) from September 1, 2020.
• The minimum wage in Ukraine from January 1, 2020, increased by UAH 550 (US$20), to UAH 4,723 (US$170) per month, or UAH 28.31 (US$1.02) per hour.