The Ministry of Finance presents the main results and achievements of 2023

State Budget 2023

• All priority expenditures were financed on time and in full. These include expenditures on security and defence, social payments and old-age payments, salaries of doctors and teachers, etc.

• State Budget revenues in 2023 increased by UAH 884.3 billion, or 49.5%, compared to the same period in 2022, and amounted to UAH 2,672.0 billion.

• State Budget expenditures increased by UAH 1,308.7 billion, or 48.4% compared to the same period in 2022, and amounted to UAH 4,014.4 billion.

• The total funding for security and defence amounted to UAH 2,648.8 billion (UAH 1,843.8 billion for the general fund and UAH 805 billion for other sources) or 41% of the expected gross domestic product, which is UAH 1,111.3 billion or 72.3% more than in 2022.

Social support of the population

• About UAH 62.2 billion was allocated to ensure the payment of social benefits to almost 2.6 million recipients.

• UAH 73.3 billion was allocated to pay housing allowances to more than 2.5 million internally displaced persons. 

• Almost 3.5 million recipients received benefits and housing subsidies for utility payments worth UAH 35.5 billion. 

• Old-age payments were made to 10.5 million pensioners and their indexation was carried out.

• For the first time, old-age payments to civil servants, academics and local government officials were indexed. 

• Almost UAH 6 billion was allocated to pay compensation for housing to 2.3 thousand war veterans, family members of fallen defenders, IDPs and combatants.

• UAH 3.4 billion was allocated to provide social support to more than 160,000 people with disabilities.

International cooperation 

• USD 42.5 billion of external financing was attracted, 27% of which was grant funding.

• In March of this year, the IMF and Ukraine approved a four-year Extended Fund Facility Arrangement for Ukraine. Two revisions of the programme have already been successfully completed, which facilitated the receipt of aid tranches. Ukraine has fulfilled all the conditions under the programme for 2023. 

• Within the framework of the Association Agreement with the EU, the Ministry of Finance has fully implemented 742 acts, 46% of the total number of EU legal acts implemented by Ukraine.

• The Ministry of Finance continues to implement the reforms agreed with its strategic partners - the IMF, the EU and the US. In particular, the Ministry of Finance is implementing measures to strengthen fiscal, external and financial stability by enhancing revenue mobilisation, avoiding monetary financing and relying on domestic debt markets, and promoting long-term financial stability.

• Ukraine joined the Council of Europe Development Bank and became the 43rd member country. The Bank's cooperation with Ukraine is aimed at implementing social projects, including education, healthcare, affordable housing and assistance to vulnerable groups. 

• In 2023, the volume of Ukraine's loan project portfolios with international financial institutions was the largest in all the years of cooperation. 

• Amendments to the Memorandum with a group of Ukraine's official creditors from the G7 countries and the Paris Club were signed to suspend payments on official debt until the end of March 2027. 

• Exactly one year after russia's full-scale invasion of Ukraine, the Ministry of Finance and the State Financial Monitoring Service of Ukraine jointly achieved the suspension of russia's membership in the FATF.

Domestic government bonds

• The interest of individuals and businesses in investing in domestic government bonds increased significantly in 2023. 

• In particular, the volume of investments by legal entities increased by more than 1.3 times to UAH 139 billion during this period, and by individuals by 1.8 times to UAH 53.3 billion.

• At the same time, since the launch of the option to purchase wartime bonds in Diia on 3 October 2022, more than UAH 2.8 billion worth of bonds have been purchased through this app.

• In total, in 2023, the State Budget received UAH 552.6 billion in bonds, including UAH 388.5 billion, USD 3.7 billion, and EUR 735.8 million. 

• In 2023, the volume of repayments of domestic government bonds amounted to UAH 369.8 billion in equivalent, including:  UAH 225.1 billion, USD 3.3 billion, and EUR 582.2 million.

• Thus, by the end of 2023, net borrowings amounted to UAH 163.4 billion, USD 370.4 million, and EUR 153.6 million. The level of domestic debt rollover was 150%. This included 172.6% for UAH-denominated domestic government bonds, 111.2% for USD-denominated domestic government bonds, and 126.4% for EUR-denominated domestic government bonds.

Medium-term budget planning has been restored

• Together with the State Budget for 2024, the medium-term indicators of the State Budget for 2025-2026 are presented.

• Starting from 2024, the cycle of full-fledged medium-term budget planning will be resumed with the preparation of the Budget Declaration for 2025-2027.

Support and development of business under martial law

• Successful implementation of programmes to support the financing of micro, small and medium-sized enterprises (MSMEs) was ensured:

• The government programme "Affordable Loans 5-7-9%" is a key driver of lending to Ukraine's economy in times of war:

- Under the programme, 45 authorised banks issued 78,964 affordable loans to entrepreneurs totalling UAH 266.9 billion, including 23,973 loans worth UAH 97.2 billion in 2023.

- international financial support for the 5-7-9% Programme was arranged - a EUR 50 million grant from KfW.

• The "Affordable Factoring" programme was launched;

• 5 new programmes were launched with the financial support of the German Government and successfully implemented through KfW and the German government company GIZ.

• In 2023, 13,658 loan agreements totalling UAH 44.7 billion were concluded using the state guarantee instrument on a portfolio basis. As of 1 January 2024, 29 lending banks were servicing 18,900 loans worth about UAH 67 billion, and a total of 32,619 loans worth UAH 103.8 billion have been disbursed to entrepreneurs since December 2020.

Reforming and improving the governance of state-owned banks 

• The share of non-performing loans (NPLs) at state-owned banks decreased to 48.8% from 53.0% at the beginning of the reporting year in 11 months of 2023.

• In January-November 2023, state-owned banks made a profit of UAH 80.3 billion, which is 516.8% or UAH 67.3 billion more than in the same period of 2022.

• As of today, the public sector banks have an effective corporate governance system in place, and the composition of their supervisory boards has been updated.

Customs transformation: expanding opportunities for international trade and security function 

Successful European integration of Ukrainian customs.

• The Ministry of Finance ensured the implementation of Ukraine's customs legislation into the EU:

- more than 700 regulations and implementing regulations of the EU Commission on the classification of certain goods in the EU Combined Nomenclature were introduced into Ukrainian legislation by the Government's decisions;

- Alternative rules of origin in bilateral trade in goods between Ukraine and the EU were introduced on 01.12.2023;

- the synchronisation of the customs legislation of Ukraine and the EU and the creation of relevant IT solutions continue.

• In the Customs Union section, Ukraine received the highest level of assessment from the European Commission among all Eastern Partnership countries. This was one of the conditions for the final decision to start negotiations on Ukraine's membership in the EU.

Development of the "customs visa-free regime" (NCTS)

• The Customs Code was amended to reduce customs clearance time for NCTS users and expand the use of transit simplifications;

• More than 41 thousand declarations under the joint transit procedure were processed: 33.6 thousand movements from the territory of Ukraine and about 7.6 thousand to Ukraine were successfully completed.

Rapid growth of authorisations for customs simplification for companies was ensured

• Authorised economic operators (AEO): 21 companies received 22 AEO authorisations, including the first type of authorisation "on confirmation of safety and reliability" (for comparison: by 2023 - 1 authorisation);

• 176 authorisations for transit simplifications, which is 22 times more than in 2022;

• 146 new authorisations for the application of simplifications in accordance with the Customs Code of Ukraine;

• Since October 2023, customs formalities have been completed using the "release at location" simplification - more than 3,500 customs declarations.

"Military Customs Visa Waiver" is the implementation of EU and NATO standards in the customs declaration of military equipment of the Armed Forces of Ukraine and partners.

Tax policy

• In 2023, Ukraine has made significant steps in the field of tax policy and financial monitoring.

Improving the efficiency of the tax system 

• National legislation was brought into line with international standards, including the adoption of a law implementing the international standard for the automatic exchange of information on financial accounts. These actions are aimed at increasing Ukraine's tax transparency and reliability as an international partner.

• Measures to combat VAT fraud and illegal refunds have been improved.

• Unlawful VAT refunds worth over UAH 7 billion were prevented.

National interests protection

• In order to prevent Iran and Syria from replenishing their budgets as countries that support Russia, international agreements on the avoidance of double taxation were terminated.

Improving professional capacity

• International partners helped to upgrade the skills of the State Tax Service's tax administration staff.

• Amendments were made to the Tax Code of Ukraine to return tax policy to the pre-war state.

Financial monitoring

•   A package of European integration projects has been developed to meet FATF standards.

Verification

• Verification and monitoring of state payments continued.

• Unauthorised payments worth over UAH 1.8 billion were prevented.

National Revenue Strategy 

• The National Revenue Strategy was adopted, which should become a key element for strengthening the economy and financial system in Ukraine.  

Objective:

- Strengthening the fiscal capacity of Ukraine;

- to adapt tax and customs legislation to EU standards;

- creating incentives for post-war recovery and economic growth.

State Budget 2024

Amidst high uncertainty, the State Budget for 2024 was adopted on time.

• Budget 2024 is balanced and realistic to implement.

• The priorities of the 2024 Budget are to finance the security and defence sector, social security, support for veterans, healthcare, education and business support.

• UAH 1 trillion 692.6 billion is allocated for the defence and security sector, which is 22.1% of GDP. 

• Due to the redistribution of wartime personal income tax, the budget provides for an increase in funding for the development of the defence industry, including UAH 51 billion for weapons production, and UAH 43.3 billion for marine drones and UAVs.

• UAH 469.4 billion is allocated for social protection, an increase of UAH 8.7 billion by 2023.

• UAH 14.3 billion is allocated to support war veterans, an increase of UAH 7.5 billion by 2023. For the first time, the budget provides for the Institute of Veteran Assistants (UAH 3.8 billion) and a pilot project on dental prosthetics (UAH 749 million).

• Healthcare expenditures, including transfers, amount to UAH 203.4 billion (+UAH 25.8 billion to 2023). The healthcare guarantee programme remains an important and key area with the amount of UAH 158.8 billion (+UAH 16 billion to 2023). For the first time, the medical guarantee programme provides for an affordable infertility treatment service using artificial insemination - UAH 1.5 billion.

• Spending on education (including transfers) will be increased by over UAH 22 billion compared to the current year, to UAH 179.1 billion. Priorities: The education subvention for teachers' salaries will be increased by UAH 15.7 billion to UAH 103.2 billion. On average, the estimated salary of a teacher will increase by 21%.

• Expenditures on sports are envisaged at UAH 7.6 billion.

• Expenditures for scientific and technical activities are envisaged at UAH 13.6 billion. 

• Expenditures for the digital transformation of priority sectors and spheres of public life and the development of Ukrainian defence technologies amount to UAH 2.5 billion.

• Expenditures on business support amounted to UAH 31.8 billion.

• The need for external support for non-security and defence-related expenditures is about USD 37.3 billion.