Ukraine’s Parliament Passes 2020 State Budget: Key Figures and Priorities

On November 14, 2019, the Verkhovna Rada of Ukraine adopted the law on the State Budget for 2020 at a plenary meeting. 280 Members of Parliament voted for the final version of the document presented by the government. After being signed by President Volodymyr Zelenskyy (he has 15 days to do so), the budget will come into force and set the country’s financial course for the upcoming year.

Key Figures of the 2020 Budget

According to the adopted document, the main budget parameters are as follows:

• Revenues: UAH 1.09 trillion (approx. $44.2 billion^*).
• Expenditures: UAH 1.18 trillion (approx. $47.9 billion^*).
• Deficit: The maximum volume is set at UAH 94.275 billion (approx. $3.82 billion^*).
• Public Debt: As of December 31, 2020, its maximum volume must not exceed UAH 2.045 trillion (approx. $83 billion^*).

These figures indicate a continuation of the policy of a moderate budget deficit, which will continue to be covered by domestic and external borrowings.

Social Guarantees and Debt Burden

The budget enshrines a gradual increase in the subsistence minimum, which serves as the basis for calculating a number of social benefits and pensions:

• from January 1, 2020 — UAH 2,027 (approx. $82.2^*);
• from July 1, 2020 — UAH 2,118 (approx. $86^*);
• from December 1, 2020 — UAH 2,189 (approx. $88.8^*).

Furthermore, the law sets the maximum volume of state-guaranteed debt at UAH 318 billion (approx. $12.9 billion^*). This is the maximum amount for which Ukraine can issue guarantees for loans attracted by state-owned enterprises or other entities.

Controversial Issues and Last-Minute Amendments

The budget’s adoption was preceded by intensive discussions and a series of compromise decisions. One of the key issues concerned the excise tax on fuel. MPs supported an amendment to the Budget Code, according to which these funds in 2020 will remain in local budgets and will not be directed directly to the Road Fund. The transition of direct allocations to the Road Fund has been postponed until 2021. This concerns an amount of approximately UAH 7.7 billion (approx. $312 million^*), which was a significant concession to the regions.

Controversial provisions on the reduction of the Regional Development Fund and new rules for using the balances of the state budget’s special fund were excluded from the final version of the law. An important change was the transfer of payments for a number of social benefits from local budgets directly to the state level, which should relieve the financial burden on local governments.

The adoption of an IMF-compliant budget sends a positive signal to foreign investors and businesses considering opportunities in Eastern Europe, as it underscores Ukraine’s commitment to maintaining macroeconomic stability and predictable fiscal policy.

Reaction and Next Steps

Although most factions voiced criticism during the discussion, the required 226 votes were ultimately secured with a significant margin. Parliament Speaker Dmytro Razumkov, announcing the results, stated: “In favor — 280. The decision is adopted, the budget is adopted.”

As noted earlier, the budget review was delayed, but parliament managed to complete the process before the end of the autumn session. The document will now be sent for signature to President Volodymyr Zelenskyy.

Analysis: A Budget in a New Political Cycle

The adoption of the 2020 state budget was the first serious test for the new parliament and government formed after the early elections. The budget can be characterized as continuity-oriented and cautious:

• Social Stability: The gradual increase in the subsistence minimum and the centralization of social payments are aimed at fulfilling campaign promises and supporting the incomes of the most vulnerable citizens.
• Compromise with Regions: The decision to leave fuel excise taxes in local budgets for an extra year is an attempt to balance national tasks (road repairs) with the needs of local budgets for stable revenue sources.
• Prudent Fiscal Policy: The deficit and public debt parameters remain within the agreements with international creditors, which is critical for continued cooperation with the IMF and other partners.

Final Thoughts: The Budget as a First Step

The adoption of the State Budget for 2020 is always more than just a set of numbers. It is a political document that defines the government’s priorities. The 2020 budget reflects the new government’s attempt to reconcile social obligations, regional demands, and strict budgetary constraints. Its implementation will show how effectively the new government can manage finances amid challenging economic conditions and high public expectations.

The main tests for this budget—effective allocation of funds, launching promised large-scale infrastructure projects, and maintaining macroeconomic stability—are still ahead.

^* Conversion to US dollars is based on the NBU exchange rate as of November 14, 2019 (1 USD ≈ 24.65 UAH). For up-to-date calculations, please use the currency converter.