In 2018, fiscal policies did not undergo radical changes either in revenue or in spending.
These changes are ahead \u2013 in 2018, the Verkhovna Rada voted for the country\u2019s transition to a three-year budget planning. So, the budget for 2019 has already been adopted taking into account the three-year plan. The budget for 2020 can be the first among the budgetary documents that will take into account the strategic objectives of the government policy and allocate the resources according to priorities rather than historical practices. This chance is to be given by a new composition of the Verkhovna Rada, which will vote for the budget after the elections, in October. As a result of the 2018 budget, Ukraine still redistributes too much money through the budget \u2013 about 43% of GDP. Economic growth could accelerate if this level fell below 40%. This can be achieved due to well-thought planning: in 2019, budget planners will face functional revisions of budget expenditures.<\/p>\n\n\n\n
The 2018 budget like previous budgets has both positive and negative points. The main ones were:
Positive points:
Due to the UAH revaluation, the debt servicing expenses were UAH 12 billion lower than expected, which contributed to a decrease in mandatory budget expenditures.
Like in 2017, the primary balance of the state budget turned out to be positive \u2013 UAH 56.2 billion (1.6% of GDP).
Reduction of the state and guaranteed state debt from 72% to 61% in relation to GDP.
The lack of quasi-fiscal expenditures, which in the previous years amounted to 2-6% of GDP.
Significant growth of defence expenditures compared to the previous year that reached 2.7% of GDP in 2018.
The successfully financed expenditures relate to the reforms in education and healthcare. The financing of the educational program \u201cNew Ukrainian School\u201d and the National Health Service made up 98% and 96% of the plan, respectively.<\/p>\n\n\n\n
Negative points:
The distribution of expenditures by functional categories is still far from the optimal one and proves rather a slow process of reviewing costs and improving their effectiveness compared to neighbouring countries in EU. However, the current structure of expenditures by functional budget classification reflects government priorities \u2013 significant expenditures for defence and social protection are compulsory and necessary.
Privatization proceeds are not fulfilled again: in 2018, the state received only UAH 269 million from the expected UAH 21.3 billion.<\/p>\n\n\n\n
The total expenditures of the general government sector remains high \u2013 43.3%. To accelerate economic growth Ukraine needs to reduce this category of expenditures to 37%.<\/p>\n\n\n\n
A 4-fold change of the state budget by the Verkhovna\nRada during the year. As a result, there was a reduction of certain categories\nof expenditures and their redistribution. It suggests ineffective budget\nplanning;
\nFor the first time in the last 8 years, the local budgets have become deficit:\nUAH -8.2 billion or 0.2% of GDP.
\nThe additional need for funding sources throughout the year. Due to the\nnon-fulfilment of the plan of privatization inflows and the lack of funds for a\nsingle Treasury account, the state had to attract additional funds both\non the external and internal markets. The problem is that these borrowings will\ncreate additional debt servicing costs in the future.
\nIn general, the analysis of the 2018 budget shows the importance of further\nsteps to ensure the transparency and predictability of public finances.\nFirstly, certain categories of expenditures and financing need to be finalized,\nsince this year there were budget programs that were not fulfilled, and the\nbudget items that did not generate cash inflows. Secondly, it is necessary to\nproceed to the three-year budget planning according to the budget declaration,\nwhich was enshrined in the Law of Ukraine No. 8044 on the introduction of the mid-term\nbudget planning. The adoption of this draft law is an achievement in the field\nof public finances, as it will make the budget process more predictable and\neffective in forthcoming years. Third, it is necessary to gradually reduce the\nshare of general government sector expenditures in relation to GDP, as the\ncurrent level of these expenditures (-43.3%) is too high for Ukraine.<\/p>\n","protected":false},"excerpt":{"rendered":"
In 2018, fiscal policies did not undergo radical changes either in revenue or in spending. These changes are ahead \u2013 in 2018, the Verkhovna Rada voted for the country\u2019s transition to a three-year budget planning. So, the budget for 2019 has already been adopted taking into account the three-year plan. The budget for 2020 can […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[176,197,143],"tags":[546],"experts":[171,218],"news_type":[140],"class_list":["post-8350","post","type-post","status-publish","format-standard","hentry","category-macroeconomics-en","category-research-list-en","category-home-news-en","tag-budget-en","experts-iryna-piontkivska-en","experts-roman-soltysyak-en","news_type-researches"],"acf":[],"_links":{"self":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts\/8350","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/comments?post=8350"}],"version-history":[{"count":0,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/posts\/8350\/revisions"}],"wp:attachment":[{"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/media?parent=8350"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/categories?post=8350"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/tags?post=8350"},{"taxonomy":"experts","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/experts?post=8350"},{"taxonomy":"news_type","embeddable":true,"href":"https:\/\/ces.org.ua\/en\/wp-json\/wp\/v2\/news_type?post=8350"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}