Draft Budget 2018 Presumes 2.4% GDP Deficit

UKRAINE - In Brief 17 Sep 2017 by Dmytro Boyarchuk
On September 15, late in the evening the Cabinet approved draft budget 2018. Proposed spending plan presumes 15% increase in revenues (up to UAH 1.1 trillion, close to $38.2 billion), a 16.3% increase in minimum wages, and 2.4% of GDP deficit. Finance Ministry expects 3% GDP growth and 7% inflation in 2018. Exchange rate is assumed at UAH 29.3/USD (average per year). No other details are available so far. In general the released numbers are fine and they are in line with our projections. The outlined deficit target is even lower than the IMF required (2.5% of GDP according to April Memorandum). We are waiting to see more details but it looks like the spending plan has good chances to be approved (no budget cuts envisaged). Also it should be acceptable for the IMF: deficit is low and Finance Ministry skipped its initiative with the tax on withdrawn capital the IMF criticized.

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