Sergii Marchenko presented the draft State Budget 2025 to the Members of Parliament of Ukraine

Today, on 20 September, Minister of Finance of Ukraine Sergii Marchenko presented the draft Law of Ukraine “On the State Budget of Ukraine for 2025”.

“This is the third Budget prepared during the full-scale invasion: with a significant uncertainty and changing situation on the frontline. In such difficult conditions and with limited resources, we were able to guarantee the main priority of the next year – the security of the country. I can confidently say that the Budget plan for 2025 will ensure the defence of Ukraine,” said Minister of Finance Sergii Marchenko during the presentation of the Budget.

Returning to medium-term budget planning. This draft has been prepared on the basis of the Budget Declaration for 2025-2027. This is a commitment under the IMF Arrangement, which has been met. All key indicators of the Budget have been agreed with the Fund's representatives as part of the recent technical mission, which Ukraine successfully completed.

Highlights from Sergii Marchenko's speech:

Macroeconomic indicators

The forecast of macroeconomic indicators for 2025, which was included in the draft budget, provides for:

• real GDP growth by 2.7%;

• consumer price index - 9.5%;

• average monthly salary - UAH 24,389.

Revenues of the general fund of the State Budget

The revenues of the general fund of the State Budget (excluding grants and inter-budget transfers) are planned to amount to UAH 2 trillion 7 billion, which is UAH 411 billion more than this year.

The revenues are based on the current tax base, taking into account the draft amendments to the Tax Code of Ukraine adopted by the Parliament in the first reading.

Main sources of revenues

Next year, we plan to increase revenues from all major taxes. In particular:

• Value added tax on imported goods - UAH 594 billion (+UAH 95 billion compared to this year's plan);

• personal income tax - UAH 354 billion (+150 billion);

• value added tax on goods produced in Ukraine - UAH 318 billion (+29 billion);

• corporate income tax - UAH 206 billion (+22 billion);

• excise tax on produced goods - UAH 132 billion (+UAH 34 billion);

• excise tax on imported goods - UAH 115 billion (+UAH 20 billion).

Expenditures

Expenditures of the general fund of the State Budget are planned to amount to UAH 3 trillion 644 billion, which is UAH 535 billion more than this year.

The draft State Budget provides for:

• Resource for security and defence: 

The total resource for national security and defence in 2025 is UAH 2 trillion 223 billion (about 26% of GDP), which is UAH 530 billion more than this year's plan and UAH 46 billion more than the 2024 plan, taking into account the amendments to the State Budget adopted by the Parliament on 18 September.

In particular:

• UAH 1 trillion 158 billion for salaries for military personnel.

• UAH 737 billion for the creation and purchase of weapons and military equipment. 

Almost UAH 55 billion is allocated for the development of the defence industry. In addition, UAH 47 billion is planned to be allocated for the development and purchase of UAVs. 

The resource – military personal income tax.

• Social protection and pensions (about UAH 420 billion)

The budget takes into account the following areas of social programmes:

• UAH 238 billion to ensure the payment of pensions;

Pensions for more than 10 million Ukrainian pensioners will be transferred on time and in full. In addition, they will be indexed in March 2025.

• UAH 128 billion will be allocated for social benefits to be received by more than 4.5 million people;

Priorities: programmes to support people with disabilities, including prosthetics - 100% of the need is covered, measures to support children and families with children - UAH 3.8 billion.

• Support for war veterans (UAH 5.6 billion)

Next year, the following will be provided to support war veterans and demobilised persons:

• UAH 3 billion for the activities of support specialists;

• UAH 1.7 billion - psychological and physical rehabilitation, professional adaptation;

• UAH 940 million for dental prosthetics and biological fatherhood and motherhood.

• Healthcare (UAH 211 billion).

In particular:

• UAH 175 billion for the implementation of the medical guarantee programme (MGP);

• UAH 12 billion for centralised procurement of medicines and medical devices;

Priorities: creation of a single medical space by involving all public healthcare institutions in the MGP, full coverage of the need for donor blood and blood components, provision of housing for healthcare workers in rural areas, and ensuring free services for patients under the MGP.

• Education (UAH 175 billion)

Of which:

• UAH 103 billion to pay teachers' salaries;

• UAH 28 billion for training students and providing grants for higher education;

• UAH 3 billion for healthy nutrition for primary school students (more than 1 million children);

Priorities: provision of safe and quality learning environment, efficiency of education subvention distribution after verification of students. 

• Culture and media (almost UAH 10 billion);

• Digital transformation (UAH 4 billion);

• Science (UAH 14 billion);

• Sports (UAH 5.6 billion);

It is important to emphasise that these expenditures do not include capital investments (in various areas, including energy, transport, education, healthcare, social protection, etc.), which are provided for separately within the framework of public investment projects PIM (Public Investment Management).

• Financing of public investment projects (PIM)

In 2024, the Government of Ukraine launched the Public Investment Management (PIM) reform. 

This is a comprehensive reform that includes a change in the approach to the selection of projects in which the state will invest. Given Ukraine's significant need for recovery and reconstruction, PIM will help to collect all projects and identify priority areas of the economy for investment. This will make it easier to identify the most relevant projects and simplify work with donors to raise funds for reconstruction. 

The Government of Ukraine is also developing an integrated IT ecosystem that will ensure optimal decision-making based on the country's strategic priorities and needs. This tool will increase the transparency of the Government's work in attracting investment.

Each project will be evaluated in terms of its impact on the Ukrainian economy, such as its contribution to GDP, the level of coverage of the population, and the degree of readiness of the project for implementation.

The reform is being implemented in line with the needs for rapid recovery and post-war reconstruction, as well as the recommendations of the World Bank, IMF and best European practices.

These include projects to restore and modernise energy infrastructure, water supply, purchase medical equipment, etc. The priority areas for 2025 are healthcare, education, transport and energy.

In 2025, a new model for managing public investment projects will be implemented. The total State Budget resource for financing investment projects will amount to UAH 156.1 billion, including UAH 115 billion of financing under state guarantees based on international agreements.

• Restoring and supporting business 

About UAH 25 billion is allocated for business support, including the 5-7-9 programme, business grants, compensation for the cost of agricultural machinery, and humanitarian demining.

Local budget resources (UAH 341 billion), which is UAH 52 billion more than in 2024.

To compensate for the losses of local budgets, including due to the redirection of personal income tax from the military, the budget provides more than UAH 51 billion.

The budget also provides UAH 12.2 billion of subsidies to compensate for the difference in tariffs for heating, water supply and sewage.

• The need for international financing

Ukraine's external financing needs in 2025 are estimated at USD 38.4 billion. The estimations were agreed with IMF experts during the IMF mission in September this year. 

We plan to raise these funds from the EU, the IMF, and the G7 countries. The decision of the G7 countries to allocate USD 50 billion to Ukraine, secured by future income from the seized assets of the russian central bank, is also important.

We are working to ensure that Ukraine can receive funding from the first days of 2025. We have clearly communicated our priority conditions to our partners. 

Firstly, these funds must be provided in the form of grants so that the debt burden does not increase. 

Also, the possibility of using them for all priority expenditures, including weapons. 

And thirdly, the funding must be unconditional. 

This USD 50 billion is the first tranche of all frozen russian assets in the G7 and EU countries. Linking financial assistance to Ukraine to russian assets means that we have made a difference in the asset situation. 

The forecast for financing the State Budget for 2025 envisages a reduction in the deficit to 19.4% of GDP (2024 (plan) - 20.6% of GDP, 2024 (plan with changes) - 24.1% of GDP). This is in line with the estimates of international partners. 

The public debt to GDP ratio will decline from 100.5% of GDP to 97.0% of GDP in 2025. In nominal terms, it will amount to UAH 8.2 trillion. 

Public borrowings are planned to amount to UAH 2 trillion 238 billion, including domestic borrowings of UAH 579.2 billion.

State debt repayment will amount to UAH 691 billion, and its servicing will amount to UAH 481 billion.

Subsequently, members of the Ukrainian Parliament and specialised committees are to formulate proposals for the draft State Budget 2025 and submit them to the Parliamentary Committee on Budget.