Ukrainian lawmaker Yaroslav Zhelezniak’s newsletter from Sept. 9-15, 2024, highlights significant steps taken in the Ukrainian parliament regarding business, economics, and international financial programs. The Verkhovna Rada approved draft law #6490-d, focusing on restarting the State Customs Service with provisions meeting IMF, World Bank, and EU requirements. The law introduces a transparent competitive procedure for selecting the SCS head, involving international representatives. Other key provisions include re-attestation of management, establishment of a disciplinary committee, integrity checks for officials, and wage increases for custom servicemen. The draft law is awaiting final approval by the Chair of the Verkhovna Rada and the President of Ukraine.
The Tax Committee recommended draft law #11416-d for the first reading, proposing an increase in taxes, specifically raising the bank profit tax rate to 50%. The Budget Committee also recommended a bill for increased defense spending by Hr 500 billion. These measures aim to address budget deficits and align with international financial commitments. Additionally, draft law #11131 focuses on restoring medium-term planning of local budgets, excluding temporarily occupied territories or war zones, and expanding opportunities for local authorities, in line with IMF requirements.
The IMF team led by Gavin Gray conducted negotiations in Kyiv for the fifth review of Ukraine’s Extended Fund Facility program, reaching a preliminary deal to provide around $1.1 billion in financial aid. The Verkhovna Rada is set to vote on a draft law for reforming the Accounting Chamber, aimed at enhancing transparency, strengthening independence, and reducing the number of members from 13 to 11. The Parliament will also consider draft laws required by the World Bank, including regulating rating agencies, addressing privatization of state banks, and establishing the State Agrarian Register.
The Cabinet of Ministers submitted draft law #12000 on the State Budget 2025, projecting GDP growth of 2.7%, inflation at 9.5%, and an average exchange rate of Hr 45 for 1 US dollar. Budget revenues are expected to increase by Hr 192 billion, mainly from direct taxes such as personal income and income tax. The state budget deficit is projected to be 19.4% of GDP or Hr 1.546 trillion, to be financed mainly from external sources. Social indicators such as the minimum wage and general subsistence minimum remain unchanged in the budget.
Despite ongoing challenges, including Russia’s invasion and state predation against businesses, Ukraine’s government is focused on implementing necessary reforms and meeting international financial commitments. The recent legislative actions in the Verkhovna Rada reflect efforts to address budget deficits, enhance transparency, and bolster economic stability in the country. The cooperation with international partners like the IMF and World Bank underscores Ukraine’s commitment to sustainable economic development and financial stability amidst external pressures.
