Last year the Ukrainian economy faced the toughest hit in its history, but managed to withstand it. Ukraine will definitely become a case study for the whole world on how to save an economy during full-scale war.
However, despite the undoubted success regarding macroeconomic stability, the war isn’t over and there are new challenges for the Ukrainian economy and state budget to come.
Let’s take a quick look at the key reasons for the good economic results in 2022. First of all, Ukraine managed to save economic stability thanks to external financial support from our international partners.
The Ukrainian budget received $31.2 bn in financial grants and credits.
Financial grants made up almost half of this sum, which means that Ukraine don’t need to pay this money back to donors.
Internal state budget revenues were the second crucial resource for economic stability. These revenues came from the State Tax Administration and the Custom Service, state-owned enterprises, the National Bank’s emissions and profit, and investment made in state bonds.
The most impressive results were shown by Ukrainian entrepreneurs who, despite all the shocks of war, have managed to provide the state budget with 99.4 percent of tax revenues planned before the war.
In absolute terms, business paid 80 bn hryvnas more than in even peaceful 2021.
Next year promises to be not much easier than the last one.
Ensuring sufficient financial recourses for the state budget remains one of the key tasks for the government, and also a challenging one. So, what can we expect in 2023?
Obviously, Ukraine relies on further financial support from international partners. The U.S. and EU have already approved new packages of more than $30 bn to help Ukraine financially throughout the year.
This gives highly optimistic prospects for obtaining $38 bn which Ukraine needs to finance its expenditure and the budget deficit.
It’s crucial for these financial flows to be permanent and on time.
What is of more concern is internal revenues.
A reminder that we cannot spend money from donors to finance the Armed Forces of Ukraine and war needs.
That’s why financial support for our defense depends on the level of internal resources that can be provided for the state budget. There are several pitfalls though.
First, while State Tax Service provided almost 100 percent of planned revenues last year, customs revenues came to only 57 percent of the plan.
With regard to numerous facts and business complaints of corruption made at State Custom Service officials, the risk of lack in revenues from the Customs Service remains very high.
Second, we still have a lot of problems in internal economic security, such as avoiding taxation, for example in gambling or excise goods turnover.
Due to such economic crimes the Ukrainian state budget may lose approximately 200-300 bn hryvnas every year. Every lost hryvna in these billions is a direct loss in funding the Ukrainian army and the country’s victory.
If we do nothing, 2023 would not be an exception.
That’s why, on my opinion, one of the top priorities of state authorities this year should be to ensure economic security.
It is for this purpose that Parliament created a Temporary Investigative Commission at the end of last year.
This is one of the effective tools for ensuring the necessary organizational and staff changes in those state bodies responsible for the country’s economic security, like the State Customs Service or Bureau of Economic Security.
And it’s one of the key steps for using internal resources effectively and supporting the economic front while the army brilliantly defends the military front.
The views expressed in this article are the author’s and not necessarily those of Kyiv Post
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