Finance Ministry Limits Spending: Possible Delays in Social Payments and "Printing" Money

The Ministry of Finance has already postponed until December a portion of non-priority budget expenditures and prepared a financing mechanism in conditions of limited liquidity. Social expenditures are currently not subject to restrictions, but Finance Minister Serhiy Marchenko did not rule out delays if revenues on the unified treasury account are insufficient.

Marchenko stated this on September 10 during a meeting of the parliamentary Committee on Finance, Tax and Customs Policy.

According to him, the Ministry of Finance has already applied the first austerity measure: expenditures that are not urgent and do not relate to the security and defense sector or the social sphere have been postponed to the end of the year - until December.

In addition, the government has prepared rules for making payments during periods when the state lacks liquidity. Under such a scenario, the security and defense sector will be financed first, and the remaining expenditures - as additional funds are received.

Marchenko emphasized that this approach will apply not only to the state budget but also to local budgets. In particular, support programs, capital construction and other non-priority expenditures may be actually suspended until sufficient liquidity is available for them.

Answering a question from Committee Chairman Danylo Hetmantsev about social expenditures, the minister stated that restrictions currently do not apply to them. At the same time, he cautioned that the situation will depend on the receipt of funds to the unified treasury account and delays cannot be completely ruled out.

Regarding possible salary delays, Marchenko expressed hope that this scenario will not happen, calling it a "financial catastrophe." According to the minister, the government expects to avoid this thanks to the adoption by parliament of bills related to Ukraine's international financial obligations.

Marchenko also warned: if the necessary decisions again fail to gain support in the Rada, the government will have to look for other ways to finance the budget. Among possible scenarios, he mentioned monetary financing, which, according to his assessment, will result in devaluation and inflationary pressure and will effectively make it impossible to continue normal cooperation with international creditors, particularly the IMF.

At the committee meeting on September 10, in particular, government bills No. 16051 and No. 15460, which change the rules of taxation and customs clearance of international parcels, were considered. The Cabinet of Ministers re-approved this package on September 7 after a failed vote in the Rada on September 1. According to the government's assessment, its adoption is associated with Ukraine receiving about €4 billion in financing from international partners. The package is part of the cooperation program with the IMF EFF for 2026-2029 and a condition of macro-financial support from the EU. 

The Cabinet also expects that the proposed changes to taxation of international parcels will provide about 10 billion UAH in additional budget revenues next year, which are planned to be directed to defense.

Sources: Verkhovna Rada Committee on Finance, Tax and Customs Policy, Cabinet of Ministers of Ukraine, Verkhovna Rada of Ukraine