«Irrespective of any [tax] reform option we have the same target - budget deficit not exceeding 3.7% in 2016», minister of finance Natalie Jaresko said in today’s press conference referring to the discussion about the draft of the tax reform.
According to the minister, state budget deficit is one of the key health indicators for the economy of any country. “The higher this deficit, the more loans we must take, which means a higher debt burden for us and for our next generations. Another risk of the higher budget deficit is the hazard of an emission meant to cover this deficit, which means printing money and triggering new waves of devaluation and inflation which is something we do not want to have”, the minister explained.
«Hence, the target of both the Ukrainian government and the IMF is to reduce the state deficit and thus to reduce the increase of the state debt, inflation etc. The lower the inflation, the sooner the National Bank would be able to reduce its interest rates and to facilitate loans to businesses thus starting the “motor” of the economy – the baning system», the minister said.
This year Ukraine has achieved a significant progress in reducing the budget deficit and managed to reduce it to 4.1% of the GDP. The target of the Ministry of Finance for next year is to further reduce it to 3.7%.
«We are convinced that the tax reform must secure return to stability and growth – instead of undermining them – to help the Ukrainian business and to secure investments into economy. Hence, we must not increase the budget deficit when implementing the tax reform. The state budget deficit amounting 3.7% of the GDP is our main KPI for next year. You must take it literally: state budget deficit is one of the key indicators for the health of economy like body temperature for humans», the minister stressed.