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Government of Ukraine approves draft State Budget for 2024: from War Budget to Victory Economy

15 September 2023

On September 15, 2023, the Government of Ukraine approved the Draft Law on the State Budget for 2024.

Today, the draft budget with the relevant supplementary documents will be submitted to the Parliament of Ukraine.

"Security and defence is the number one priority in the draft State Budget for 2024. The expenditures are planned at the same level as this year. We are increasing funding for the development of the defence industry and the purchase of drones. The social sphere, raising social standards, supporting veterans, financing education and healthcare are also among the Government's top priorities. All of this takes into account the main guidelines of the future Ukrainian Doctrine of the President of Ukraine," - said Minister of Finance of Ukraine Sergii Marchenko during a meeting of the Cabinet of Ministers.

The main priorities of the future Ukrainian Doctrine of President of Ukraine Volodymyr Zelenskyy are the following:

- philosophy of victory (measures to strengthen the state's defence capability, repulsing russia's armed aggression against Ukraine);

- globalisation of Ukrainian security (reform and development of the defence industry, missile weapons and creation of a missile defence system, purchase of UAVs);

- policy of heroes (Institute of Veteran's Assistant, provision of housing for war veterans and their families, new system of military education, development of a platform for exporting Ukrainian defence knowledge, physical rehabilitation of veterans);

- the policy of justice in Ukraine (optimisation of the number of judges and strengthening the role of the jury trial, financial assistance to employees of critical infrastructure facilities of state and local authorities affected by the russian federation);

- transformation in ten years (modernisation of Ukrainian education and stimulation of science development in Ukraine, modernisation of labour legislation, creation of new jobs, modernisation of pension payments (pension indexation), accessibility of shelters, settlement of the issue of weapons, demining of territories, new foreign policy, new relations between the state and society, expansion of diplomatic presence in Africa).

The revenues of the general fund of the State Budget (excluding official transfers and grants) amounted to UAH  1.56 trillion. In contrast, the expenditures of the general fund of the State Budget amounted to UAH 3,108.2 billion.

Thus, the draft State Budget of Ukraine provides for:

Defence and security sector - UAH 1.69 trillion. This amounts to 21.6% of GDP.

This amount includes UAH 1.54 trillion from the general fund, UAH 119.8 billion from the special fund, including UAH 96.3 billion from the military personal income tax to the special fund of the State Budget, and UAH 30 billion from state guarantees.

The budget envisages a 7-fold increase in funding for the development of the defence industry to UAH 55.8 billion, as well as the purchase of drones - UAH 48.1 billion.

  • social protection - UAH 468.8 billion (+  UAH 24.7 billion or 5.6% by 2023), including support for socially vulnerable groups of the population. For the first time, the budget takes into account social support for military personnel (UAH 1 billion) and foster care for orphans (UAH 0.5 billion);

  • support for war veterans - UAH 14.3 billion (+ UAH 7.5 billion by 2023), including reformatted approaches to veteran policy. For the first time, the budget takes into account the Institute of Veteran`s Assistant (UAH 3.8 billion) and a pilot project on dental prosthetics (UAH 749 million);

  • education - UAH 178.8 billion (+UAH 22.9 billion by 2023), including an 18% increase in teacher salaries by 2023 and an improvement in the quality of educational services. For the first time, the budget takes into account the modernisation of school canteens to ensure healthy nutrition for children - UAH 1.5 billion, the purchase of the latest educational equipment for vocational education institutions - UAH 0.5 billion, and the modernisation of research infrastructure for young scientists - UAH 232 million;

  • healthcare - UAH 201.9 billion, including transfers (+UAH 24.4 billion by 2023). Expenditures under the medical guarantees programme have been increased, and expenditures for the centralised procurement of medicines and medical devices have been provided. For the first time, the budget takes into account the development of a system of high-precision cancer diagnostics (PET scans) - UAH 1.6 billion;

  • digital transformation of priority sectors and areas of public life - UAH 2.5 billion (+UAH 2.1 billion by 2023). For the first time, the budget takes into account innovative projects for the security and defence sector - UAH 1.5 billion, and the Mriya app - access to knowledge from anywhere in the world - UAH 142 million;

  • culture - UAH 10.7 billion (+UAH 2.3 billion by 2023). For the first time, the budget takes into account the introduction of certificates for books for children - UAH 376 million;

  • sports - UAH 7.5 billion (+ UAH 3.6 billion by 2023). Ensuring support for sports for proper representation of Ukraine in the international sports arena and training of Ukrainian athletes;

  • expenditures on the Ministry of Foreign Affairs - UAH 8.3 billion (+UAH 2.2 billion). Expenditures for the MFA were increased to strengthen the institutional capacity of Ukraine's foreign diplomatic missions in the context of russia's war against Ukraine;

  • business support - UAH 30.8 billion. In particular, for the Business Development Fund, grants for business creation or development, housing provision through the Ukrainian Financial Housing Company, partial compensation for the cost of agricultural machinery and equipment of domestic production.

In addition, it is planned to raise social standards to increase citizens' incomes:

  • increase in the minimum wage to UAH 7,100 from 1 January and to UAH 8,000 from 1 July (+ 19.4%);

  • increase in the official salary of an employee of the first tariff category of the unified tariff scale to UAH 3,195 from 1 January and to UAH 3,600 from 1 July (+ 24.4%);

  • increase in the subsistence minimum per person per month to UAH 2,920 from 1 January (+ 12.8%).

The State Budget financing forecast for 2024 envisages a reduction in the State Budget deficit to 20.4% of GDP (27% of GDP in 2023). Public debt repayment is planned to amount to UAH 606.5 billion, including UAH 421.6 billion of domestic debt and UAH 184.9 billion of external debt.

 

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