Briefly about the main issues in the 2019 draft budget

The next year will be not easy for the Ukrainian government – it is necessary to go through the peak debt loading against the background of elections and reforms. Actually, it does not leave room for manoeuvres both before voters and before lenders. And the restrained growth rates of the government’s 2019 draft budget prove it.

“Overall, the budget looks ‘restrained’. Probably, it was written with the International Monetary Fund in mind. Spending and revenues are evaluated rather conservatively in it. A high level of spending on the maintenance and repayment of debts does not allow reducing the tax burden. It limits the possibilities for growth of budget expenditures and carries refinancing risks”, the analysts of the Center for Economic Strategy stated on the basis of the analysis of the draft Law on the State Budget of Ukraine for 2019.

As for the risks for the implementation of the budget, the analysts mention a possible shortfall in deficit financing due to significant needs in debt refinancing and optimistic expectations for privatization. As for expenditures, there is a risk of the underestimated necessary spending on financing the subsidies to pay for utilities in case of rising gas prices.