Budget 2025: What lawmakers approved and how it will impact the lives of Ukrainians in the coming year.

The Verkhovna Rada has adopted in the second reading and as a whole the draft state budget of Ukraine for 2025. Where exactly the state will source funds next year, how much, and what it will spend them on – read in the overview of the country's main financial document by RBC-Ukraine editor Ruslan Kislyak.

What will the state budget of Ukraine look like in 2025? Key parameters

Budget revenues and expenditures

The planned revenues of the state budget of Ukraine for 2025, excluding transfers, are expected to be around 2.34 trillion hryvnias, including general fund revenues of 2.15 trillion hryvnias and special fund revenues of 193.87 billion.

Expenditures of the budget are planned at 3.94 trillion hryvnias, including general fund expenditures of 3.69 trillion hryvnias and special fund expenditures of 247.43 billion.

In particular, defense expenditures are allocated at 2.22 trillion hryvnias.

The budget deficit is expected to be 1.64 trillion hryvnias.

The maximum total amount of public and guaranteed state debt is 8.62 trillion hryvnias.

The planned volume of external financing reaches 38.4 billion dollars.

Expected economic dynamics

The budget for next year is calculated based on the government's forecast of an expected economic growth rate of 2.7%. The nominal gross domestic product is expected to be 8.47 trillion hryvnias.

The government forecast includes an exchange rate for the national currency at the end of the year at 45.6 hryvnias per US dollar. The average annual exchange rate is expected to be 45 hryvnias per dollar.

Consumer price growth (inflation) is anticipated to be around 9.5%.

It should be noted that the government's macroeconomic projections included in the budget differ from similar indicators calculated by the National Bank. Additionally, these indicators are periodically adjusted based on the actual economic dynamics in the country. Therefore, some of the aforementioned budget parameters will likely be revised over time.

What will the standard of living be like for people

The social standards laid out in the budget for next year unfortunately remain at the current year's level due to a lack of additional funding sources amid the ongoing war and the need to allocate most of the budget to defense needs.

The minimum subsistence level is set at 2920 hryvnias. The minimum wage is 8000 hryvnias. The minimum hourly wage is 48 hryvnias.

The minimum pension remains unchanged at 2361 hryvnias. However, the government promises to index pensions in March.

The average annual salary before taxes and fees is expected to be around 24.4 thousand hryvnias, with an expected unemployment rate of 17.7%.

What changes did the government make to the budget for the second reading

RBC-Ukraine reported on what new proposals the Cabinet of Ministers introduced for the second reading of the budget draft in the Verkhovna Rada.

Compared to the first reading of the state budget draft, total revenues were increased by 2.82 billion hryvnias, including general fund revenues increased by 50.01 billion hryvnias, while special fund revenues were reduced by 47.19 billion hryvnias.

The main sources for securing the additional 50.01 billion hryvnias in general fund revenues were identified by the government as follows. Firstly, and most importantly, it was decided to abandon the financing of the state road fund in the amount of 43.21 billion hryvnias. This idea, supported by parliament in the first reading of the budget, caused a scandal in society – people did not understand how it was possible to spend tens of billions on road repairs while there was a shortage of funds for the country's defense. Therefore, the government has abandoned this idea. The specified amount will be fully directed to the general fund of the budget and used for defense needs.

However, the roads will not be completely left without funding. The budget draft includes a new budget program called "Development and Maintenance of Public Roads" with annual funding of 12.6 billion hryvnias.

Officials also partially removed another controversial provision adopted by parliament in the first reading of the budget draft – regarding the increase in funding for prosecutors' salaries by 2.7 billion hryvnias. For the second reading, the proposed amount has been reduced by 1.2 billion hryvnias.

Compared to the first reading of the budget draft, total expenditures have increased by 2.82 billion hryvnias, including general fund expenditures increased by 50 billion hryvnias, while special fund expenditures decreased by 47.19 billion hryvnias.

Increased expenditures are planned, in particular, for:

• the development of weapons and military equipment – by 1.02 billion hryvnias;
• reimbursement of the cost of medicines under the state guarantee program – 596 million hryvnias;
• ensuring the provision of day care services for disabled children – 328.6 million hryvnias;
• providing assistance for the living expenses of internally displaced persons – 1 billion hryvnias;
• state support for the development of livestock farming and processing of agricultural products – 1 billion hryvnias;
• protection of state authorities and officials – 198.3 million hryvnias.

Balancing the state budget during wartime is a challenging task

A number of new programs have appeared in the budget.

In particular, 11.997 billion hryvnias have been allocated for additional payments to secondary school teachers.

The state will provide additional financial support of 500 million hryvnias to enterprises in the defense industry.

827.9 million hryvnias have been allocated for the financing of critical infrastructure in civil aviation.

The government plans to allocate 1 billion hryvnias for regional development.

In support of the state program "єВідновлення", 1 billion hryvnias are planned to be allocated. Additionally, 3 billion hryvnias for compensation for destroyed housing.

For support of Ukrainians abroad and assistance in their return to Ukraine, the budget proposes to allocate 150 million hryvnias.

Moreover, 2.2 billion hryvnias are planned for activities supporting and assisting war veterans, their families, and the families of the deceased, while another 463.9 million hryvnias will go to the activities of the Ministry of Veterans Affairs.

What changes did the Rada make to the budget for the second reading

After refining the government budget draft in the relevant parliamentary committee, the final version of the document presented for voting in the session hall included the following provisions.

Firstly, 64% of the personal income tax (PIT) revenues will remain in the general funds of budgets for rural, settlement, and urban territorial communities. This is necessary to ensure a reliable passage of the heating season for 2024-2025 and to ensure timely payments for communal services and energy carriers in 2025. At the same time, the subsidy to regional budgets for covering the tariff difference amounting to 12.2 billion hryvnias has been canceled.

Additionally, frontline communities are allowed not to transfer the reverse subsidy to the state budget amounting to 593 million hryvnias.

According to the adopted version of the document, 2 billion dollars, or 90 billion hryvnias (in equivalent) of loan funds from the United Kingdom will be allocated to the