Cabinet approves budget resolution 2016 with 2% GDP growth

On April 9, the Cabinet approved a budget resolution which presumed 2% GDP growth and a 9% CPI increase in 2016. According to the document, the state budget deficit will be near 3% of next year’s GDP. The Hryvnia exchange rate is expected to be on the level of UAH 22.5/USD on average throughout the year.

Alexander Paraschiy: Unfortunately, this budget resolution tells us little about our future. This document is merely a set of indicators the authorities will probably use for developing a spending plan for 2016. No doubt, we do have a chance to experience GDP growth next year as well as single-digit inflation. However, the strengthening of the national currency to UAH 22.5/USD from the current level near UAH 24/USD looks like an optimistic view. Also, a central budget deficit at 3% of GDP is not secured – a 3.7% of GDP deficit was indicated for the general budget in the IMF memorandum.

All in all, the budget resolution gives us some vision about how the authorities would like to see Ukraine’s economic future. But these numbers are neither a commitment nor any target that the cabinet will stick to.