Ukraine ends 2019 with smaller budget deficit than expected

Ukraine ended 2019 with a smaller budget deficit than it had envisaged, saving $370 million, the Finance Ministry reported on Jan. 2.

The country didn’t reach its revenue goals, but it reduced spending by 3.2% to compensate. Ukraine had budgeted spending of $47 billion in 2019 but eventually spent only $40 billion.

Ukraine expected to see a budget deficit of $3.8 billion. By the end of the year, the deficit was $3.4 billion, which is about 1.8% of Ukraine’s gross domestic product. The ministry covered the deficit with foreign loans.

“We can now say that we met the challenges, while the coordinated and responsible work of all the authorities enabled us to fulfill our obligations,” the ministry’s statement reads on its website.

The total revenue that Ukraine generated in 2019 was $37 billion, which is 3.1% less than expected. The main factors that affected the country’s revenue include the decrease in tobacco production, slower import growth, lifting taxes on import of solar panels and windmills, lower gas production, and the reduction of gas prices.

Meanwhile, Ukraine’s plan to privatize state-owned enterprises, which had been expected to bring $720 million, was fulfilled only by 3%.

But the country fully repaid the public debt it had planned to pay in 2019 – a first since 2014. The country spent $19.6 billion on repaying and servicing its foreign debts. The country entered 2020 with a state debt of $74.5 billion.

The budget for 2020 foresees that Ukraine’s total spending will reach $50 billion while earnings will be around $45 billion; roughly $6 billion will go to repayment of the public debt.