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channel on Wednesday. According to him, 302 MPs backed this decision, one was against it, and 26 abstained. Zhelezniak predicted that consideration of the law at the final reading will take place only in October of this year.
6.1.2 Budget dynamics - specific issues...
Ukraine's annual military expenditures are estimated at UAH 3T. Of this amount, UAH 1.6T is for the security and defense sectors, said the newly appointed Minister of Defense, Rustem Umyerov, on September 6. As he noted, the budget's revenue totals UAH 1.4T, that is, more than UAH 1.5T needs to be sourced. According to him, more than a million people have joined the country's security and defense sector, of which more than 800,000 are in the Ukrainian military. For comparison, before the war, this figure was 261,000. Also, defense expenditures have increased by more than six times compared to 2021, and on the Armed Forces, by almost 10 times. "The defense budget currently makes up a third of GDP, a huge figure for any economy in the world," Umerov stated. He specified that by the end of the current year Ukraine will need an additional UAH 250B for monetary support, and that these costs are increasing every day.
Ukraine will start raising taxes on banks first if the IMF requests higher taxes. As of today, the Ministry of Finance does not foresee changes in the tax system anytime soon, and there is no need to talk about tax increases, Minister of Finance Serhiy Marchenko said at the EBA Global Outlook event. However, if the IMF starts discussions on the introduction of additional taxation, then banks will be taxed first. "Therefore, we have fears that if we have discussions with the IMF regarding additional taxation, it will be a sector that receives excess profits," the minister said. At the same time, as he noted, these will be extreme measures if the state does not have enough external funding. "We are finishing this year quite confidently. I hope that we will be able to fulfill all our obligations. First, this concerns the fulfillment of obligations to the security sector. These are key budget expenditures. Now they are fully financed," Marchenko clarified.
6.1.3 Budget dynamics - funding
The US House of Representatives has approved a proposal to extend the funding of the country's government for 45 days, which does not include aid to Ukraine on September 29. The project was supported by 335 congressmen, 91 spoke against it. Now the initiative must be approved by the Senate.
Which international partners will help Ukraine in 2024? According to the draft budget for next year, Ukraine will receive $9B in macro-financial assistance from the EU, an IMF loan under the EFF program that will amount to $5.4B, a $2B loan from the International Bank for Reconstruction and Development, and $25B in assistance from the US government and other official creditors. In total, state borrowing will amount to UAH 2.134T ($58M), of which foreign loans are UAH 1.712T, the forecast weighted average interest rate on which is about 5.5%. Domestic borrowing will amount to UAH 422B ($11.5M), and the average rate is 19%. The value of the projected annual average exchange rate of the hryvnia to the dollar in the budget is fixed at UAH 41.4 for $1.
49 UKRAINE Country Report October 2023 www.intellinews.com