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6.0 Public Sector 6.1 Budget
A gap between the financial contributions of Ukraine’s allies and its financial commitments complicates the state budget deficit. The first quarter of 2023 is currently the most difficult challenge for Ukraine as far as covering the budget deficit due to the big difference between partners’ commitments to financial support and the necessary allocation of funds, said Finance Minister Serhiy Marchenko. He specified that the vast difference between obligations and payments creates a problem with liquidity and a threat of further financing measures with regard to the state budget deficit by the National Bank of Ukraine. This provokes negative consequences for inflation, the exchange rate, and macro stability. In April 2022, the Ukrainian government informed its international partners that the monthly deficit was $5B. But the financial assistance received was $1.7B in April, $1.5B in May, $4.4B in June, $1.7B in July, $4.7B in August, and about $2B in September.
The new head of the National Bank has announced Ukraine's need for $38B next year.
The newly appointed head of the National Bank, Andriy Pishnyi, outlined his office’s priorities. Among them are macroeconomic stability, the effectiveness of the macroeconomic policy, negotiations with international partners, and maintaining the banking system's stability, the NBU reported.
"Next year will not be easy, with a $38B total need for financing. Its involvement is a joint matter for all government organizations, which we will work on," he said during his presentation with the participation of the president.
According to Pishnyi, one of the priorities for the next few weeks is negotiations with the IMF mission and reaching an agreement on a position. The new head of the NBU supported the policy of anti-crisis management that has been in use.
6.1.1 Budget dynamics - results
A difficult year will be in front of Ukraine in 2023: the public finance deficit is estimated at $3-4bn, it is necessary to ensure sustainability of the economy, and the IMF will provide support: an international forum will be brought together in the near future to solve this problem, the Managing Director of the International Monetary Fund Kristalina Georgieva has said at the AGM.
Ukraine’s 2023 state budget passes the first reading. Deputies have adopted a resolution on conclusions and proposals for the document, the Ministry of Finance said. In the 2023 state budget draft, 45% of expenditures are planned for security and defense, which is 17.8% of the national GDP. The primary income and outflow figures for the state budget: UAH 1.1 trillion in revenues and UAH 2.3 trillion in expenditures from the general fund, covering the deficit through macro-financial assistance from international partners and the sale of military bonds, 16% earmarked for social programs to support Ukrainians, 7% for health care, 6.2% for education, UAH 24B in aid to the communities of the liberated territories, UAH 19.4B for the Fund for the Elimination of the Consequences of Armed Aggression, a continuation of the
31 UKRAINE Country Report November 2022 www.intellinews.com