The cabinet of ministers of Ukraine will submit the 2022 draft state budget to the Ukrainian parliament today.
Increasing funding for education, medicine, social programs, the army and economic growth is expected to take priority in this year’s budget. The draft budget proposes sweeping reforms, including plans to increase the minimum wage from current $225 to $245 by December 1, 2021. The government will also introduce a $450 million increase in subsidies, which will be used in the housing and municipal service sectors.
The government will likely need to reduce the state budget deficit first in order to ensure financial stability for Ukraine. The proposed budget aims to reduce the deficit to 3.5% of gross domestic product in 2022, from the 5.1% expected in 2021. However, meeting this goal will require diminished spending practices compared to the COVID-19 period. Specifically, the budget aims to increase spending to 6.5% in the next three years, with revenue projected to grow by an average 9.8%. Yet, there is no detail on how the government will approach these budgetary constraints. Expect, Ukraine to increase individual and enterprise taxes in order to make up for budgetary constraints.
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