Reaching an agreement with the International Monetary Fund (IMF) on a four-year $15.6 billion EFF program allows us to talk about solving the problem of financing the state budget deficit 2023 and the possibility to more actively seek funds for reconstruction, Finance Minister Serhiy Marchenko said.
“We are also actively working to find funds for the recovery, and that will be the main focus and priority of our activities right now,” he said on Wednesday’s national telethon.
Marchenko said the EFF program is an anchor program, allowing donor support to come together. “If all those commitments made by the G7 countries are fulfilled, we can close the state budget deficit for 2023,” stated the head of the Ministry of Finance.
Talking about attraction of funds for reconstruction, the Minister noted that this year Ukraine will not be able to spend more than $14 billion, “these are the figures that have been agreed upon by the World Bank experts together with the relevant authorities: the Ministry of Reconstruction and other ministries.
According to him, the Russian frozen assets will not help in solving this problem this year, and the Ministry of Finance will try to seek funds on its own.
“We in pre-war times did not master any more than we are now proposing. We have a war going on right now, not always a business that does renovations, repairs, is willing to work with a country that’s at war. Therefore, after the war there will be a completely different reality and other opportunities, including the involvement of private investment and business in the reconstruction of Ukraine, “- Marchenko commented on the recently voiced general assessment of Ukraine’s needs for reconstruction in $411 billion and the need for 2023.
The Minister believes that the post-war capacity increase is not a difficult task.
As reported, the Ukrainian government, the World Bank Group, the European Commission and the United Nations recently raised Ukraine’s recovery needs estimate to $411 billion as of February 24, 2023 from $349 billion as of June 1, 2022.
RDNA2 estimates that Ukraine will require $14 billion in investment in 2023 for priority recovery and reconstruction.
The need to finance the state budget deficit in 2023 is estimated at a minimum of $38 billion.
The Ministry of Finance has begun work on the preparation of a draft Budget Declaration for 2023-2025, which the Cabinet of Ministers must approve no later than June 1.
“First Deputy Finance Minister Denys Uliutin held an online meeting with representatives of the ministry on the preparation of the draft Budget Declaration for 2023-2025,” the Finance Ministry’s website reported.
At the same time, the Ministry of Finance insists on the preparation by budget managers of high-quality proposals regarding the goals of state policy and the volume of additional expenditures to achieve them in order to form a vision of budget policy for the medium term and make calculations of budget indicators for the next three years.
As reported, the Verkhovna Rada has approved the Budget Declaration for 2022-2024. The Ministry of Finance prepares such a document for three years annually. After the adoption of the new declaration, the previous one becomes invalid, the ministry reminded.
The Ministry of Finance has proposed that spending on health care is budgeted at 4.5% of GDP, on education at 7.2% in the consolidated document for 2022, the ministry said on its website on Friday.
“We plan to budget spending on healthcare at 4.5% of GDP for next year,” the press service of Deputy Finance Minister Roman Yermolychev reported, citing him speaking after a meeting with representatives of trade unions and employers regarding budgeting for 2022.
At the same time, Yermolychev emphasized the need to improve the efficiency of the use of funds not only in medicine, but also in education.
“In the field of education, funds should work for education. Next year, it is planned about 7.2% of GDP according to the consolidated budget. We assume the possibility of updating the material and technical base of schools and supporting the organization of high-quality meals for students of general secondary educational institutions,” the Deputy Minister of Finance said.
As reported, when preparing the state budget for 2021, ex-Minister of Health Maksym Stepanov insisted on the need to budget 5% of GDP on health care. In turn, Finance Minister Serhiy Marchenko said that an increase in financing of the Ministry of Health to 5% may occur in 2023 thanks to a gradual increase in this dynamics from 4.2% of GDP budgeted in 2021.
The total public debt of Ukraine in March 2021 decreased in hryvnia by UAH 38.68 billion, to UAH 2.514 trillion, in dollars – by $ 1.24 billion, to $ 90.17 billion, the Ministry of Finance said on the website.
“As of the end of March 2021, the total government and government-guaranteed debt in the national currency amounted to UAH 2.514 trillion ($ 90.17 billion in equivalent). Compared to the previous month, the state and publicly guaranteed debt of Ukraine decreased in hryvnia equivalent by UAH 38.68 billion, and by $ 1.24 billion in dollar terms,” the ministry said in a release.
At the same time, public debt decreased by UAH 28.91 billion ($ 906.4 million), to UAH 2.234 trillion ($ 80.14 billion), of which external debt is 54.2% (including 21.2% of the total amount are loans from international financial organizations, 28.9% – eurobonds).
The state-guaranteed debt fell by UAH 9.77 billion ($ 33.4 million), the Finance Ministry said.
“The share of public debt in hryvnia at the end of March 2021 increased to 39.8%,” the Finance Ministry said.
“In March 2021, the Ministry of Finance held 29 auctions for the placement of government bonds, attracted UAH 44.4 billion to finance the state budget,” the report says.
According to the ministry, payments for repayment of the state debt in January-March this year amounted to UAH 106.9 billion, for servicing – UAH 37.4 billion.
Minister of Finance Serhiy Marchenko criticized head of the Ministry of Health Maksym Stepanov for poor planning of measures to combat COVID-19, while admitting the possibility of increasing spending on medicine in the state budget-2021.
“He behaves like a character from ’12 Chairs’. ‘Money in the morning – chairs in the evening, money in the evening – chairs in the morning, but money in advance.’ That’s how Stepanov behaves. His task is to get as much of a budget as possible, taking advantage of the fact that we have a COVID, we have problems, we have people dying, and then, using this rhetoric, to solve those problems that are necessary to solve. I think this is absolutely wrong,” Marchenko said in an interview with lb.ua.
“We must first propose a plan, show a solution to the problem, and there was enough time for that, and then ask the finance minister or the government questions to search for funds. And now we have the approach – first money, and then I will fight COVID-19. It is impossible to put the question like that,” the minister said.
At the same time, the head of the Ministry of Finance pointed to the unspent funds of the Fund to Combat COVID-19 at the end of 2020.
“At the Cabinet of Ministers we often sort things out, and this is normal, because I have something to ask him, in particular, about the leftovers of last year. He collected money, and in the end we got leftovers that were not used,” Marchenko said.
Speaking about the possibility of correction of the state budget for 2021, he also said there is a possibility of increasing spending on medicine.
“There is a possibility of such a scenario, since there is a need to close several issues on medicine. We will discuss with the IMF and with other partners the possibility of minor adjustments to the budget,” Marchenko said.
