Wolf's thousand. How Zelensky's initiative will operate and what the funds can be spent on.

It is expected that payments will begin on December 1 to the “National Cashback” card. Accordingly, funds can be spent in similar categories: for utility payments, mobile communications, etc.

The Ministry of Economy assures that the program will be funded by partners’ funds that cannot be used "for the war".

Who will be able to receive the money?

According to Zelensky, every Ukrainian will be able to receive one thousand hryvnias: "eSupport for all our people - adults, children, every family in Ukraine. One thousand hryvnias per person – for a family, it will amount to several thousand hryvnias".

However, there are a few "buts". It remains unclear how children without their own cards will be able to receive the funds. Questions also arise about whether elderly people, who often do not have smartphones and, consequently, cannot pass verification in "Diia" and obtain the “National Cashback” card, will be able to receive the one thousand hryvnias. Thus, the segment of the population that needs the "bonus" the most has the least chance of receiving it.

According to the authors’ plan, Ukrainians who are abroad or in temporarily occupied territories will not receive "Zelensky's thousand". Verification will allegedly occur via the user's geolocation in "Diia".

How to receive the thousand?

To receive "Zelensky's thousand," it is likely that the process will be similar to previous payments, such as "eSupport" (the "Covid thousand"). A corresponding section will appear in the "Diia" application, and the user will only need to grant permission to receive the financial aid.

Funds will be credited to the “National Cashback” card, which Ukrainians could have issued earlier as part of the program of the same name. This means that this card is already linked to "Diia".

If such a card is not available, it can be opened at one of the partner banks of the program and added to the application. A step-by-step guide on how to open a “National Cashback” card can be found at the link.

What can the money be spent on?

Deputy Minister of Economy Oleksiy Sobolev explained that the funds can be spent on utility payments, medications, transportation, mobile communications, and Ukrainian books. Since the funds will be credited to the “National Cashback” card, it is likely that they can be spent on the same categories as the cashback itself.

The government hopes that such payments will stimulate the economy. "This will additionally support Ukrainian micro and small businesses. These funds are marked. There is a defined scope for where they can be directed. But they can also be donated to the Armed Forces of Ukraine," Sobolev emphasized.

However, the payment of these funds may have an alternative effect. By having the opportunity to pay for utilities with "Zelensky's thousand," a person may use their saved money to purchase imported goods, which could lead to an increase in demand for currency and a depreciation of the hryvnia. Additionally, such large-scale economic stimulation programs may increase the money supply, negatively affecting inflation.

When will the program take effect?

The program is designed as support for the population during the winter period. According to Zelensky, in addition to systematic preparations for winter, "there are decisions that can be made directly to support people".

It is expected that the payment of funds will begin on December 1, 2024, and they can be used throughout the winter, including in January-February 2025. The final deadline for the payment of funds has not yet been specified. Thus, those who receive the funds later, for example, in February, will have significantly less time to spend them.

Where will the money come from?

The Ministry of Economy explains that the source of the payments is the unspent balances from certain budget programs that will not be utilized by the end of the year. Due to the peculiarities of the budget system, after the budget year ends, these unspent balances "expire". Thus, the authorities decided to distribute these funds to Ukrainians.

According to the Openbudget portal, from January to August 2024 (the latest available data), the Ministry of Economy used only 54.6% of the planned 36.56 billion UAH in expenditures. At the same time, some business support programs were not utilized at all during the first eight months of 2024.

In particular, the state did not use any of the 3 billion UAH allocated for state support of investment projects with significant investments, nor the 3 billion UAH designated for stimulating the creation of industrial parks. The program for demining agricultural lands also turned out to be unused: during the first eight months of 2024, not a single hryvnia was spent from the 3 billion UAH allocated in the budget.

The government has almost not utilized the funds allocated for the program to stimulate demand for domestic goods. This is the program under which "national cashback" is paid. By the end of August, only 10 million UAH had been spent on this program out of the planned 3.01 billion UAH. In October, Ukrainians received the first payments of cashback for September. Their total amount is also unimpressive: only 37.2 million UAH. Thus, the total "cashback" cost the budget about 47 million UAH.

If we analyze all the programs of the Ministry of Economy that were utilized at less than 50% as of early September, the total amount of unspent balances will be about 11.4 billion UAH. This would be enough to pay one thousand hryvnias to about 11 million Ukrainians.

At the same time, the Ministry of Economy's budget contains programs that were either fully utilized or had exhausted funds by August. For instance, the "eOselya" program, which reduces mortgage costs for military personnel, budget workers, and several other categories, has fully utilized its allocated 1.78 billion UAH. This is despite the fact that the expenditure plan for this program had already been increased from 1.44 billion UAH.

Moreover, funding for the "5-7-9%" preferential lending program was running out back in August. In the first eight months of 2024, the government used 83% of the planned 18 billion UAH.

How much will the program cost the budget?

Currently, it is unclear how many Ukrainians will be able to take advantage of the program, as well as the total number of citizens in Ukraine. The State Statistics Service does not keep such statistics during martial law. Meanwhile, the government denies estimates that the unconditional payment of one thousand hryvnias will cost the state 30 billion UAH, meaning that the funds would be received by 30 million people.

"For example, the previous version of the "eSupport" program during the COVID pandemic cost approximately 8 billion UAH. The final amount of this program for the three winter months will depend on the number of Ukrainians who wish to participate. It is currently impossible to name a final figure," Sobolev noted.