Ukraine parliament amends 2018 budget to cover pension spending

Ukraine’s parliament approved on Dec. 6 a bill
amending the 2018 state budget in order to cover planned spending on pensions,
the epravda.com.ua news site reported. The measure drew 242 votes compared to
226 needed.

State budget funds earmarked for pensions rose UAH
10.8 bln (from UAH 139.3 bln, being redirected from other spending items such
as government sector reforms (reduced by UAH 1.2 bln) and agricultural
subsidies (cut by UAH 1.8 bln). The increase also include around UAH 7.2 bln
that had been earmarked to help low-income families with children, but weren’t
spent this year.

Parliament also reduced its budgeted privatization
receipts to UAH 18.8 bln from UAH 21.3 bln. Overall, budget revenues increased
by UAH 18.5 mln to UAH 918.0 bln, while expenditures swelled UAH 230 mln to UAH
991.9 bln.

Evgeniya Akhtyrko: The need
for additional transfers to the Pension Fund is the result of overbudgeting.
The original 2018 pension fund budget assumed revenues from social payments
amounting to UAH 208.3 bln, or a 33.2% yoy increase. Yet in 11M18, this revenue
source (which includes personal income tax and pension fund contributions paid
by employers) has amounted to UAH 204.0 bln, increasing only 26.8% yoy.

These amendments won’t cause the state budget
deficit to exceed the planned threshold of 2.5% of GDP, which is what the IMF
is most concerned about in extending its next loan tranche in the coming weeks.