In accordance with the Constitution and the Budget Code of Ukraine and based on the proposal of the Ministry of Finance, the Cabinet of Ministers of Ukraine on September 14 approved the draft law «On the State Budget of Ukraine 2016» and submitted it to the VerkhovnaRada of Ukraine. The draft law under No. 3000 was registered at the Verkhovna Rada on September 14.
The Ministry of Finance is now striving to recover the public finance system. Its tools for that include prudent budgetary policy and the incremental reduction of the state budget deficit combined with the protection of the financially poor citizens and sufficient defense and security funding.
The draft law «On the State Budget of Ukraine 2016» is calculated on the basis of the macroeconomic forecast which was agreed with the International Monetary Fund and assumes the real GDP growth of 2% in 2016, the increase of the nominal GDP to UAH 2 262 bn. and the consumer price index at the level of 112%.
At the same time, the Ministry of Finance emphasizes that this draft law is based on the current tax and budget law. However, the planned revenues and expenses of the state budget 2016 can soon be changed substantially, given the expected changes in the Ukrainian legislation.
Below expected changes are to be taken into account:
- adoption of the tax reform by the Verkhovna Rada. On September 3 the Ministry of Finance presented its draft of the tax reform at the meeting of the National Reform Council. After the public discussion of the reform draft the Ministry of Finance expects the new tax law to be adopted and to come into effect starting from January 1, 2016, which may have a substantial impact on the revenues of the state budget and the local budgets in Ukraine.
- adoption of legislation which is necessary to finalize the restructuring of Ukraine’s debt as well as to have the terms of restructuring approved by the holders of each of 14 issues of Eurobonds which are part of the restructuring agreement. The necessary legal procedures can only be started after the adoption of the relevant legislation by the Verkhovna Rada. Until restructuring is complete, the Ministry of Finance does not have final figures on the expected needs of the state budget for the repayment of the state debt and debt warranted by Ukraine in 2016.
- examination of the national defense needs for 2016 by the National Security and Defense Council, which is going to impact the expenses of the state budget in 2016.
Hence, the draft law on the state budget 2016 is subject to amendments in line with the possible changes in the Tax and Budget Codes, new legislation on debt restructuring as well as decisions of the National Security and Defense Council on the national defense needs.
Considering the above points, the Cabinet of Ministers of Ukraine on September 14 withdrew the draft law on the state budget 2016 for further review.
After the review the amended draft law will be submitted to the Verkhovna Rada for detailed examination, discussion and adoption.