Spending plan 2022

UKRAINE - In Brief 17 Sep 2021 by Dmytro Boyarchuk

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On September 15, MinFin submitted spending plan 2022 to the parliament, and yesterday it was finally released to the public. We saw nothing extraordinary in the proposed spending plan. However, there are several points we want to highlight for our readers. The proposed spending plan was developed based on the outdated macro-forecast. MinFin calculated tax collections assuming UAH 5.37 trillion nominal GDP in 2022. At the same time, even the NBU estimates nominal GDP at least UAH 100 billion higher at the level of UAH 5.49 trillion for next year. Our calculations show we might see UAH 5.38 trillion already this year amid soaring inflationary trends.The central budget deficit was cut to 3.5% of GDP (UAH 188 billion) from 5.1% of GDP (UAH 246.6 billion). However, it’s unclear what level of the deficit we will see this year amid ongoing difficulties with local bonds placement. By August, MinFin reported a central budget deficit at the level of UAH 6 billion. In what way MinFin might generate UAH 240 billion to cover the fiscal gap in 2021 – is a big question.The authorities marked near UAH 30 billion spendings conditional on tax rules tightening (draft law #5600) what promptly were criticized by all business -associations. This attempt to blackmail society ignores that an adequate adjustment of macro-forecast in line with ongoing inflation trends will give MinFin much more than outlined UAH 30 billion marked as a carrot in exchange for tighter taxation. More detail on the proposed spending plan 2022 can see in the table below.