Money for the budget: tax increases are not on the agenda. At least this year
4 April 10:56
The reserves that need to be raised to finance the state budget in 2026, given the uncertainty of foreign aid, were discussed during a meeting the day before between IMF mission chief Gavin Gray and Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy Danylo Hetmantsev, Komersant ukrainskyi reports.
As reported, this week the state budget received the eighth tranche from the IMF under the four-year program of the Extended Fund Facility in the amount of about $400 million. It was reported that the IMF had reduced the size of this tranche from $900 million to $400 million at the request of the Ukrainian Ministry of Finance to reserve more funds for the next year.
According to Danylo Hetmantsev, the situation with financing in 2026 is extremely difficult, and therefore it is advisable to look for sources of budget replenishment.
Could such sources be tax increases?
MP Danylo Hetmantsev advocates paying attention, first of all, to the following unused budget reserves
– unshadowing, which should raise at least $4 billion in addition to the budget plan this year, and even more next year
– reducing spending on inefficient budget programs such as cashback: the military’s spending censorship should finally start working;
– raising additional funds through government bonds at the expense of bank liquidity and local budgets.
According to Danylo Hetmantsev, the issue of raising taxes cannot be considered until the above resources are exhausted.
The Ministry of Finance also has no plans to raise taxes
Speaking about the tax policy for the next year during a telethon, the Minister of Finance of Ukraine Sergii Marchenko said that the government has no plans for new tax increases.
“For the next year, at this time, we do not plan to come up with proposals to increase taxes. We have no such plans. We would prefer to avoid these steps in the short term, because we understand that it is quite painful for businesses and citizens who are trying to survive in difficult conditions,” the Finance Minister said.
As an alternative to additional funding for the army, the Minister mentioned the possibility of using frozen Russian assets.
What about this year’s budget?
The Ministry of Finance has previously stated that the state budget for 2025 is designed to ensure the country’s stability even if military operations continue throughout the year.
There is an opinion that from a budgetary point of view, Ukraine has entered this year in a more stable position than it did in 2024. This is the opinion of Maksym Samoiliuk, an economist at the Center for Economic Strategy.
According to him, this year’s financing needs amount to $38 billion, of which $2.7 billion is expected from the IMF and $13.1 billion from the EU under the Ukraine Facility program. The remaining need of $22.2 billion will be covered almost entirely by the ERA program, which is a mechanism for transferring funds from the proceeds of frozen assets of the Russian Federation. The total volume of this program is $50 billion. Of this, $1 billion from the United States was transferred to the budget in 2024. The EU disbursed the first €3 billion under this mechanism in January 2025.
At the same time, the expert emphasized, “ERA funds must be used wisely and a safety margin must be maintained for 2026-2027.”
This week, partners have been particularly active in supporting Ukraine
On Tuesday, Ukraine received a tranche of EUR 3.5 billion from the European Union (EUR 3.1 billion in the form of a soft loan and EUR 0.4 billion in the form of a grant) under the Ukraine Facility program. As Danylo Hetmantsev explained, this is the first payment under the instrument based on the results of fulfilling 13 indicators envisaged by the Ukraine Plan for the fourth quarter of 2024. In total, financial assistance from the EU through the Ukraine Facility has already reached EUR 19.6 billion.
on April 2, the state budget received the eighth tranche from the IMF under the four-year Extended Fund Facility (EFF) program in the amount of about $400 million. This brought the total funding under the EFF program to over $10.1 billion out of the total $15.5 billion provided.
