Spending plan 2022 approved with small deficit 3.5% of GDP and conservative revenues targets

UKRAINE - In Brief 03 Dec 2021 by Dmytro Boyarchuk
Yesterday, on Dec 2nd, Verkhovna Rada approved spending plan 2022. The final version of the document was not released yet, some marginal revenues and spending have been added on the last moment. But the deficit target was left unchanged at the level of 3.5% of GDP. Targeted tax collections remain conservative despite increased taxes on some operations the day before budget 2022 was voted in. Minfin developed the spending plan based on outdated macro-parameters with nominal GDP projected to reach UAH 5.4 trillion in 2022. However, Ukrainian GDP will exceed the level already this year thanks to ballooning inflation. In other words, Minfin put itself on safe side with extremely conservative revenues’ target thus securing many positive reports about “overpreformance” next year. Probably, this position of Minfin on budget planning for 2022 was the reason why the IMF approved second review before spending plan 2022 was approved.

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