Cabinet approves 2021 budget draft with 5.5% of GDP deficit

Ukraine’s Cabinet of
Ministers lowered the deficit of the 2021 state budget to
5.47% of GDP from 6.0% of GDP on Nov. 26, Interfax-Ukraine newswire reported
the same day citing Prime Minister Denys Shmyhal. The budget deficit in the
draft law proposed for the second reading in the Verkhovna Rada is slashed by
UAH 24 bln to UAH 246 bln.

The updated draft
law assumes budget revenue of UAH 1,092 bln (UAH  21
bln more compared to the
first draft) and budget expenditures of UAH 1,328 bln (UAH 3 bln less).

Evgeniya Akhtyrko: This document is the result of
MinFin’s recent effort aimed to amend the draft budget for the second reading
in order to ñomply with the IMF’s vision of a “realistic” financial plan for
the country which urgently needs the financial
support of
international financial institutions.

We expect the
adjusted draft law will successfully pass the second reading in
Rada next week. This
will somewhat alleviate the talks with the IMF, and MinFin might use this as a
point while trying to access the international debt market with a new placement
of Eurobonds which is necessary for budget gap financing amid the low capacity
of the domestic debt market.