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Finance Ministry presents draft state budget for 2023 with deficit of 20% of GDP

KYIV. Sept 21 (Interfax-Ukraine) – Minister of Finance Serhiy Marchenko at a meeting of the Verkhovna Rada presented the draft state budget of Ukraine for 2023 with national security and defense spending of UAH 1.14 trillion, or 17.8% of GDP and a deficit of 20% of GDP, which is supposed to be financed with the help of external partners.

"It is as objective as possible and takes into account risks, has clearly defined priorities: strengthening the state’s defense capability and social protection of citizens," he said in a press release from the department.

According to it, the revenues of the general fund of the state budget in the draft document are determined in the amount of UAH 1.147 trillion, which is UAH 138 billion more than expected revenues this year, while expenditures are UAH 2.269 trillion, which is less than the expected need for this year by UAH 272.7 billion.

"The Ministry of Finance is a consistent supporter of the stability of tax rates during martial law. This is not the time for experiments. Therefore, revenues are calculated on the basis of the current taxation system," the minister said.

According to the presentation, next year income tax is expected to reduce by UAH 26.4 billion and deductions of dividends and profits from state-owned companies by UAH 41.3 billion, but at the same time, internal VAT is expected to increase by UAH 48.9 billion and excise tax by UAH 4 billion.

Receipts from external partners, primarily the US, the EU and the IMF, are expected in the amount of $38 billion next year.

Marchenko specified that this year, as part of negotiations with international partners, Ukraine has already received $19 billion in financial support, of which almost 50% is grant funds.

"By the end of the year, we plan to raise about another $17 billion in additional financing," he said.

The draft state budget for 2023 is calculated on the forecast of real GDP growth next year by 4.6%, and nominal – up to UAH 6.4 trillion from UAH 4.68 trillion this year and UAH 5.46 trillion in the past year.

Inflation next year is expected to remain at 30% compared to 30.1% this year, the average salary will increase to UAH 18,510 per month from UAH 14,030.