On March 30, Deputy Minister of Finance Roman Kachur presented a draft of the “Key areas of the budgetary policy for 2017” elaborated by the Ministry of Finance (the so-called Budgetary Resolution).
The Ministry of Finance is actively working on recovery of the public financial system which shall be a basis for the resumption of the sustainable economic development of Ukraine and, accordingly, the prosperity of all citizens of Ukraine. A big step in this direction was made in 2015, when the Ministry of Finance for the first time in 4 years met all budget revenue targets an significantly reduced the deficit of the state and consolidated budget (the budget deficit was reduced to 2.3% compared to 4.9% in 2014). Thanks to that, the need for new loans as well as the devaluation and inflation risks in the economy were also reduced. The law on the state budget for 2016 continues this trend.
The draft of the Key areas of the budgetary policy for 2017 sets guidelines for the public financial system in 2017 and is set to continue the recovery of the public financial system and further increase of its transparency.
The draft is based on the following approaches:
- more intensive use of the zero-based budgeting principle;
- gradual transition to the system of midterm planning. With this purpose, key midterm indicators and tasks were set for the participants of the budget process. Thus, the budget resolution for 2017 for the first time sets guidelines for the public financial system in the midterm run;
- concise form of the document, achieved by the removal of duplications.
The adoption of the above draft document shall contribute to the implementation of a consistent and responsible taxation and budgetary policy. This policy shall make it possible to continue the recovery of the public financial system and thus to contribute to the recovery of a sustainable economic growth and prosperity of all citizens.
Key facts on the draft of the Key areas of the budgetary policy for 2017
The document is based on the following assumptions:
- in 2017 Ukraine will be meeting the deadlines set by cooperation programs with the IMF and other international organizations as well as by the Association Agreement between Ukraine and the European Union;
- the Government will be gradually reducing the budget deficit and public debt (calculated in % of the GDP). The maximum budget deficit will remain within the annual indicators set by the cooperation program with the IMF (Extended Funding Facility) (3% of the GDP in 2017 and 2.5% of the GDP in 2018, 2.3% of the GDP in 2019);
- the maximum public debt in the midterm run will not exceed 66.8% of the GDP by the end of 2017, 63.9% of the GDP by the end of 2018 and 61.8% of the GDP by the end of 2019.