War, debt, and Zelensky's populism: How will the budget for 2025 be allocated?
The total expenditure planned by the government for 2025 is nearly 4 trillion UAH, with more than half – 2.2 trillion UAH – allocated for funding the security and defense sector.
After the budget was approved in its first reading, its key indicators remained almost unchanged. However, the document included several "surprises" for prosecutors, special pensioners, and teachers.
What kind of budget will the country live by in 2025, and are there risks associated with its implementation?
Main Figures
Regarding the general parameters of the state budget for 2025, the EP reported after the Cabinet of Ministers approved the draft of this document on September 13. The government version of the budget was adopted by deputies in the first reading on October 31. Since then, the main budget parameters have remained largely unchanged, as has the macroeconomic forecast on which the Ministry of Finance based its revenue and expenditure calculations.
Between the first and second readings, the government and deputies did not revise the main social standards. The minimum wage and the living wage for 2025 will remain at the 2024 level:
- living wage for working-age individuals – 3,028 UAH;
- for children under six years old – 2,563 UAH;
- for children aged 6 to 18 years – 3,196 UAH;
- for persons who have lost their ability to work – 2,361 UAH;
- minimum wage – 8,000 UAH.
Before the second reading of the budget, the Verkhovna Rada decided not to revise the special living wage used to determine prosecutors' salaries. It will remain at 1,600 UAH. This means that in 2025, prosecutors' salaries will not increase, allowing for savings of around 1.22 billion UAH.
The total revenue that the state plans to collect in 2025 will amount to 2.32 trillion UAH. Compared to the version prior to the first reading, this figure has decreased somewhat. In particular, revenue from personal income tax (PIT) was reduced by 20.1 billion UAH because the share of PIT retained in the regions will increase from 60% to 64% of the collected amount. Additional resources were provided to communities primarily to help them get through the current heating season and prepare for the next one.
The total expenditure will be 3.99 trillion UAH. The majority of this sum will go to the security and defense sector – 2.2 trillion UAH or over a quarter of the projected GDP. Three-quarters of this amount, 1.5 trillion UAH, will be allocated for financing the Ministry of Defense programs. It is likely that the defense expenditure is not final. In previous years, the government and parliament have repeatedly increased the planned expenditures, so it is possible that this will happen again in 2025.
The maximum budget deficit in 2025 is projected to be 19.4% of GDP, while the state and guaranteed state debt at the end of 2025 should not exceed 8.62 trillion UAH – 97% of GDP.
What Else Will Be Funded
The largest item of non-military expenditure in the 2025 budget will be servicing the state debt. The government plans to spend 480 billion UAH on interest payments for domestic and foreign loans – more than on the social sector, which has historically ranked as the largest expenditure item in the budget prior to the full-scale war.
In 2025, social programs are expected to cost the state around 420 billion UAH – 50 billion UAH less than in 2024. Primarily, funding for the Pension Fund, which pays "special pensions," will be cut, as part of these payments will start to be financed by the Pension Fund itself.
Among other significant changes to budget expenditures is the abolition of the Road Fund. The state used funds from it for the maintenance and construction of roads, as well as for repaying debts from loans of the former "Ukravtodor." These funds had a specific source of revenue: taxes on fuel and vehicles.
In 2025, the size of the Road Fund was supposed to be 43.2 billion UAH. However, before the second reading, the government decided to allocate these funds to the general "pot." This will allow them to be spent on military needs. Specifically, 39.3 billion UAH in excise taxes on fuel and vehicles, 3.8 billion UAH in import duties, as well as funds from road fines and fees for using toll roads will be directed to the military budget.
Thus, funding for the maintenance and construction of roads, as well as the repayment of debts from "Ukravtodor" loans, will be carried out directly through government decisions.
New budget programs have emerged before the second reading: 3 billion UAH is planned for compensation for destroyed housing, 827.9 million UAH for the functioning of critical infrastructure operators in civil aviation, and 150 million UAH for supporting Ukrainians abroad and facilitating their return to Ukraine.
Other expenditures will remain nearly at the 2024 level. In particular, education expenditures will increase by 18 billion UAH (to 198.9 billion UAH), and healthcare expenditures will rise by 12 billion UAH (to 217 billion UAH).
Surprises and Challenges
Despite the difficult financial conditions Ukraine has faced for nearly three years, the authorities have included several pleasant surprises in the budget. For instance, the government found around 10 billion UAH for the payment of "Zelensky's thousand". This amount will be sourced from the remaining funds in the unemployment insurance fund.
In 2024, 5 billion UAH is planned for "Zelensky's thousand," reallocated from various business support programs within the Ministry of Economy's budget. The government expects that no more than 15 million citizens will receive the "winter thousand."
Another pleasant surprise is additional payments to teachers. In 2025, nearly 12 billion UAH has been allocated for this purpose. It is expected that starting January 1, each teacher will receive an additional 1,300 UAH per month, and from September 1, this will increase to 2,600 UAH.
However, there are also several unpleasant surprises in the budget. One of them – the refusal to raise salaries for prosecutors – has already been mentioned. Other budget workers will also not see higher salaries, as the state will not increase the minimum wage in 2025, which affects their salaries.
Most social payments and benefits tied to the living wage will also remain unchanged. In the context of rising inflation, such a move may lead to a decrease in the real income of citizens.
Another unpleasant surprise concerns displaced pensioners. The state plans to withdraw unused funds from their bank accounts if they have not used their pension accounts for over a year. Overall, this involves 11.3 billion UAH, which will be directed to the Pension Fund.
The state also plans to limit "privileged" pensions paid to certain categories of citizens. Often, "special pensioners" fight through the courts for payments that exceed the maximum allowable ten living wages (23,