Page 40 - UKRRptSept22

55% of Ukraine’s population could be living in poverty by the end of 2023, according to the World Bank’s estimates.
Russia’s invasion has wrecked Ukraine’s economy, devastating its two key industries: agriculture and metallurgy. An assessment from the Kyiv School of Economics found that the damage done to Ukraine’s infrastructure has reached $108.3 billion, which has helped accelerate the financial crisis.
Despite the promise of prodigious financial support from allies, Ukraine’s state budget has been mostly supported by the NBU and government bonds. Out of $26.9bn in state budget financing since February 24, Ukraine has only received around $14bn from foreign funding.
Debt service of government bonds exceeds borrowings by UAH 30.7B.
Since the beginning of the war, the amount of funds paid by the Ukrainian government for repayment of domestic debt instruments exceeds UAH 30.7B, which is the amount of funds attracted to the state budget through government bonds auctions, reported the National Bank. Thus, during the five months of the war, the government allocated UAH 112.2B, $1.5B, and €168M to repay domestic government bonds. On July 27, the Ministry of Finance paid the equivalent of UAH 6.4B, of which UAH 3.2B went to individuals and business representatives. At the same time, UAH 92B, $908.7M, and €383.5M were raised from the placement of new debt instruments on the domestic market. In March, the amount of funds received by the government at auctions from the sale of bonds exceeded the payment amount for these instruments by UAH 10.6B. However, in the future, the balance of internal debt operations of the government will become negative.
6.1.1 Budget dynamics - results
The Ukrainian budget received record revenues of UAH 305B. In August, the Ukrainian budget received record revenues of UAH 305.6B ($8.25B), which came from both external and internal resources. According to Yaroslav Zhelezniak, a member of the Finance Committee, tax revenue in August amounted to UAH 70B, which is 17% more than in August of last year. At the same time, income tax fell significantly, by UAH 17B, below the government plan. The customs office collected UAH 30B in August, which is UAH 7B more than in July. As Zheleznyak added, the historically high revenues were influenced by the unblocking of Ukrainian sea ports, the hryvnia exchange rate, and high inflation. Proceeds from military bonds amounted to UAH 10.8B and NBU financing of UAH 30B. Thus, the budget's funding from internal resources amounted to approximately UAH 134B and $4.69B (UAH 172B) from external financing.
The state budget received $3bn in budget grant aid from the United States through the World Bank mechanism on August 24, according to Prime Minister Denys Shmyhal. This is the first tranche of additional $4.5bn in direct budget support.
Due to war, the state budget has been denied UAH 176B. Due to the war, the lack of specific revenues in the state budget for January-June 2022 amounted to at least UAH 176B, with UAH 104B due to a reduction in imports, GDP, profits of enterprises, and employment. Moreover, due to changes to the tax and customs legislation necessary for operating enterprises in wartime
40 UKRAINE Country Report September 2022 www.intellinews.com