The Ministry of Finance announces a significant increase in taxes in Ukraine
If the war lasts more than three or four months, painful measures will be required, which include a significant increase in taxes and a sharp reduction in spending.
This was stated by Minister of Finance of Ukraine Serhiy Marchenko in a commentary to The Economist.
According to him, the World Bank predicts that Ukraine's GDP will decline by about 45% in 2022, the Ministry of Finance is leaving the figure of 44%.
Marchenko also noted that customs revenues, which make up a significant portion of tax collections, have fallen to about a quarter of their pre-war levels thanks to reduced imports and the suspension of many duties. Another big burden is military salaries.
As the Minister of Finance stressed, this is about $5 billion a month, which is approximately 5% of Ukraine's GDP for each month of the war.
It is noted that the situation is restrained by printing money through the issuance of war bonds, for which the Government pays about 11%, which is less than the inflation rate.
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