On December 3, economist Oleh Pendzin discussed the adoption of Ukraine's 2024 state budget and the challenges in covering its significant deficit and social spending.
The budget's revenues are projected at approximately 2.8 trillion UAH, while expenditures reach 4.8 trillion. The gap is to be closed mainly by borrowing, but the origin of around $19 billion remains unclear. A part of this borrowing is expected from loans and frozen Russian assets, while additional international assistance, especially from Europe, is anticipated. Yet, the decision to transfer profits from frozen Russian assets to Ukraine is slowed down by some European countries.
Key challenges highlighted by the expert include uncertainty about indexing social standards, the lack of wage hikes for military personnel, and persistent structural issues with the shadow economy and tax schemes in big business.
Against an uncertain backdrop regarding US and EU decisions, Pendzin points to the fragmentation of European aid and urges for a review of budget priorities and greater transparency in public finances. He also emphasizes the need for tax reforms and tackling the shadow sector.
Overall, Pendzin notes the difficult financial situation, expresses skepticism about current spending efficiency, and stresses the need to focus resources on the country's most vulnerable groups.
