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inflation helps to keep budget collections above the plan. The higher budget revenue will enable the government to execute the planned budget expenditures with less borrowing in 2021.
State Customs Service exceeded its revenue plan by UAH1.1bn. In December 2021, the State Customs Service of Ukraine transferred UAH52.7bn ($1.93bn) to thebnudget of Ukraine (compared to the planned UAH51.6bnln) and fulfilled the plan by 102.1% or UAH1.1bn ($40 M) above the goal. As a result, the State Customs Service exceeded the plan for January-December 2021bny UAH30.2bn and transferred to the general fund UAH409.3bn and the special fund UAH75.6bn. According to ukrinform, in 2021, compared to 2020 (UAH358.6bn), customs revenues increased by UAH126.3bn or 35%.
6.1.2 Budget dynamics - specific issues...
In his address, President Zelenskiy announced that funding for the defence and security sector in 2022 will exceed UAH320bn. “In 2022, for the first time in 30 years, funding for the defence and security sector will exceed UAH320bn ($11.9bn). In 2018 this amount was UAH191.7bn ($7.1bn)”, said Zelenskiy. “The funds will be used to launch a missile program, restore the Ukrainian fleet and create cyber troops in Ukraine”, he added.
Ukraine's budget is waiting on receipt of UAH6bn for the sale of casino licences. The state budget received UAH1.34bn ($50mn), which is only 18% of the planned revenue, UAH7.4bn. As of November 2021, most of the income came from selling licences to organise gambling in casino gambling halls, UAH360mn. Internet gambling, UAH304mn, and revenue from the installation of slot machines, UAH309mn. Currently, 28 gambling brands are registered in Ukraine, reported opendatabot.
Tax pressure drives businesses into the shadows. “The authorities should work to reduce tax pressure on business and not increase it, as was done by adopting bill 5600. Under this condition, enterprises will continue to go into the shadow”, said Svetlana Mikhailovskaya, the Deputy Director of the European Business Association (EBA). She added that such an increase in taxes would put an extra burden on business and not lead to any positive results. The EBA insists on reducing the fiscal pressure on entrepreneurs, particularly in reducing the burden on the wages fund.
6.1.3 Budget dynamics - funding
Ukraine has started negotiating a new EU financial aid program, expected to be for more than €1.2bn over three years, Bloomberg reports, citing Yuriy Butsa, Ukraine’s commissioner for public debt management. Butsa said: “We have formally requested from the European Commission a long-term, macro-financial program to ensure sustainable financing in the upcoming years.” As before, the program would run concurrently with an IMF program and would be contingent on adherence to IMF strictures. With a €600mn payout in October, the IMF has disbursed to Ukraine €1.2bn over the last two years.
The World Bank on December 17 approved a €300mn loan to Ukraine to support reforms and help mitigate the impact of the Covid-19 pandemic. The Economic Recovery Development Policy Loan aims to support the
36 UKRAINE Country Report January 2022 www.intellinews.com