Next year’s $51 billion national budget won’t curry favor with the International Monetary Fund. It is characterized by a growing deficit, conservative revenue projections and a weaker hryvnia.
Analysts believe that fiscal adjustments, as well as the adoption of the budget prior to the IMF’s January visit to Kyiv, won’t help Ukraine to strike a deal on a new IMF lending program.
The opposition, which did not support the government’s budget adopted on Dec. 6, said the pro-presidential majority in the outgoing parliament rushed to pass the budget during its last day in session because it feared it would be harder for them to muster enough votes in the newly elected parliament, which is scheduled to take over on Dec. 12.
The budget sets a deficit of Hr 50.4 billion ($6.2 billion) or 3.2 percent of gross domestic product. This is higher than this year’s planned 2.7 percent of GDP deficit.
However, analysts at Dragon Capital forecast a darker picture, expecting the general government deficit (excluding state-owned Naftogaz’s deficit) to reach 3.7 percent of GDP.
The average rate for the U.S. dollar in the budget is set at Hr 8.3, up from the current Hr 8, which could indicate increased chances for the currency’s devaluation next year as the country appears to be heading into recession.
