Ukraine parliament approves 2019 state budget in first reading
19 October 2018
Ukraine’s parliament voted on Oct. 18 to approve the
first reading of the 2019 state budget. The draft was approved with minimal changes
from what the Cabinet of Ministers submitted in September, according to
epravda.com.ua news report.
The draft budget was based on the current taxation
regime and current natural gas prices for households, which is an unrealistic
assumption given Ukraine’s commitment to the IMF to increase the rates.
Therefore, it significantly underestimates expenditures on social payments.
Also, the law does not assume the introduction of a tax on withdrawn capital to
substitute the corporate income tax, as is being lobbied by the president but
opposed by IFIs due to the risk of budget revenues underperforming.
Alexander Paraschiy: It is not
clear yet when the parliament will be ready to vote for a final draft of the
2019 budget, without which Ukraine is unlikely to get IMF approval of the next
loan tranche, upon which critical international financing is dependent,
including Eurobonds. It’s possible it will be approved in full at the next Rada
sessions, which are scheduled for Nov. 6-9 and Nov. 20-23. We continue to
expect progress in Ukraine’s talks with the IMF in November.
