Parliament adopted the 2022 budget with ₴1.3 trillion revenue and ₴1.5 trillion spending

At a plenary session on Thursday, Ukraine’s parliament passed in the second reading the draft state budget for 2022 with ₴1.3 trillion in revenue (including the general fund of ₴1.182 trillion) and ₴1.5 trillion in spending (including the general fund of ₴1.346 trillion).

268 MPs voted in favor of the draft state budget, including: 215 from the Servant of the People, 21 from For the Future, 19 from the Trust, 2 from the Fatherland, 1 from the Voice and 10 self-nominated MPs.

The 2022 budget provides for a ₴30.5 billion increase in CAPEX to ₴142 billion. CAPEX share in the state budget grew to 9.4%.  Presenting the draft budget for the second reading, Minister of Finance, Serhii Marchenko, said it was a record figure over the past 10 years.

Revenue and spending of the draft state budget prepared for the second reading were set at ₴1.332 billion and ₴1.521 billion respectively, with a deficit limit maintained at 3.5% of GDP as agreed with Ukraine’s international partners.

General indicators of the 2022 draft state budget in the finalized draft Law have changed compared to the draft budget presented for the first reading as follows:

• revenue increased by ₴54.7 billion, or 4.3%, including the general fund by ₴50 billion and the special fund by ₴4.7 billion;
• spending grew by ₴55.7 billion, or 3.9%, including the general fund by ₴50 billion and the special fund by ₴5.7 billion;
• lending decreased by ₴207.8 million, or 0.9% (for the special fund);
• deficit (financing) increased by ₴792.1 million, or 0.4% (for the special fund).

Hence, the state budget deficit ceiling is supposed to be set at 3.5% of projected GDP; but this amount does not meet the requirements of the second and third indents Article 14(1) of the Budget Code of Ukraine reading that the state budget deficit ceiling may not exceed 3% of GDP. In this respect, the second indent of paragraph 3 of the “Final Provisions” Section of the finalized draft Law proposes to suspend the above provisions of the Code for 2022.

The finalized draft Law proposes to make no changes in the monthly amount of minimum wage and cost of living per capita (including for major social and demographic groups). Hence, the document fails to take into account item 2.10 of part 2 of the Budget Conclusions on potential further increase in state social standards in 2022.

When it comes to revenue of the general fund of the state budget, the following growth is expected:

• rent for subsoil use for production of natural gas and oil by ₴24 billion;
• corporate income tax by ₴21 billion;
• domestic VAT by ₴13 billion;
• import VAT by ₴6.5 billion;
• excise tax by ₴2.7 billion;
• environmental tax by ₴1.7 billion.

As reported earlier, on 2 November 2021, the parliament has approved in principle the draft state budget for 2022. Earlier, in mid-September, the Cabinet of Ministers presented the document with a ₴162 billion increase in revenue to ₴1.28 trillion and a ₴103 billion increase in spending to ₴1.46 trillion.

It included the following key indicators:

• nominal GDP — ₴5.368 trillion;
• GDP growth — 3.8%;
• inflation index — 6.2%;
• producer price index — 7.8%;
• state budget deficit — ₴188 billion, or 3.5% of GDP;
• ₴/$ exchange rate — ₴28.6–28.7/$1;
• growth in exports of goods and services — 6.5%;
• growth in imports of goods and services — 9.2%;
• average monthly wage — ₴15,300;

unemployment rate — 8.5%.