State budget deficit in 2021 expected at nearly UAH 170B - KSE forecast

In 2021, the state budget deficit in terms of its general fund will stand at about UAH 170 billion with the year’s target of UAH 220 billion.

That’s according to the chief of the Center for Analysis of Public Finance and Public Administration of the Kyiv School of Economics, Daryna Marchak, Ukrinform reports with reference to the KSE press service.

"According to our estimates, by the end of 2021, the deficit of the state budget’s general fund will be slightly lower than provided by the Law on the State Budget, given the savings on expenditures and debt payments. However, financing even a lower budget deficit will require a significant increase in debt borrowing by the Ministry of Finance, which is difficult to implement without active cooperation with the IMF and access to foreign markets," said the expert.

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According to Marchak, in November-December, the deficit will be about UAH 115 billion. And in order to finance it and carry out the target repayments on public debt (UAH 64.4 billion), the Ministry of Finance needs to borrow another UAH 180 billion in two months, or an average of UAH 90 billion per month. At the same time, in January-October, the average monthly borrowing stood at nearly UAH 40 billion.

In addition, Marchak reminded that in October, amendments to the state budget came into force, which increased the revenues and expenditures targets by almost UAH 40 billion. The decision was made by the Council given the stable overfulfillment of budget revenues over the previous months. As a result, the target revenues in October increased by UAH 2.8 billion, in November – by UAH 31 billion, and in December – by UAH 5.8 billion.

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Also in October this year, local budget revenues continued to grow rapidly. In October, local budgets received UAH 34.4 billion, which is UAH 6.4 billion (22.9%) more year-on-year. In January-October, the level of execution of local budgets’ revenue part (excluding own revenues of budgetary institutions and intergovernmental transfers) amounted to 104.9%, which is the best indicator for the last four years.

As Ukrinform reported earlier, the Verkhovna Rada passed at first reading the bill on the 2022 State Budget.

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