Ukraine's budget deficit for 2025 will be $35 billion, but assistance from partners will cover roughly $20 billion, Prime Minister Denys Shmyhal said on Aug. 27.
Speaking at the "Ukraine 2024. Independence" forum, Shmyhal clarified that the $20 billion will be covered by the EU's Ukraine Facility program and by assistance from the International Monetary Fund.
"We still have these $15 billion not yet covered by agreements with our partners," the prime minister said.
"Therefore, we understand that we will have to look for them either in our domestic sources, or take some of the $50 billion from the frozen Russian assets, or keep working on how our partners can support us with this missing amount," Shmyhal said.
The Group of Seven (G7) agreed to provide Ukraine with a loan of $50 billion by the end of this year that would be covered by the proceeds of some $300 billion in Russian assets frozen on G7 members' accounts.
Parliament Speaker Ruslan Stefanchuk said that the parliament and the government are discussing additional budget revenues, saying that there "will be difficult decisions.
Shmyhal presented a four-step plan his government plans to implement to fill the gap in the country’s budget for the next year.
"Now we have a critical need to find additional funds for our defense and our defense capability. This is hundreds of billions of hryvnias. Amendments to the budget for more than Hr 500 billion (over $12 billion) this year have been submitted to the parliament.
"This is what we need to pay the salaries of our military, whose number is growing, to purchase the appropriate military equipment to finance the Ukrainian defense industry. To raise these funds, we are focusing on four steps," he said.
According to the prime minister, the first step is to increase domestic borrowing. He noted that the Ukrainian market and banks are ready for this.
Shmyhal added that negotiations with the National Bank to increase domestic borrowing had taken place, so the government sees this as a potential opportunity by the end of this year.
"We are also implementing the 'fight or work' principle, which introduces a number of measures that will bring the labor market out of the shadows. These are important points for increasing the number of jobs, for raising average wages in industries, and for filling our budget," he said.
The government will also increase the corporate income tax rate for banks. In addition, it plans to expand the basis for the military tax and increase the military tax rates in some instances.
The prime minister also said that in 2025, Ukraine’s budget deficit will be slightly lower than in 2024. This year, the total gap in the country's budget was $38 billion.
On Aug. 11, Finance Minister Serhii Marchenko said that delays in U.S. aid have contributed to Ukraine’s soaring budget deficit in 2024.
Ukrainian State-Owned Enterprises Weekly
(Updated: )
