The thirteenth issue is about the financial situation in Ukraine. What’s wrong with economic mobilization? Are there alternatives to raising taxes? How can the UAH 500 billion budget gap be closed by the end of this year? Why are stadiums being built in time of war?
In the new episode of the podcast “Budget Talks” you will find answers to these and other topical questions. Viktor Maziarchuk, Head of the Center for Fiscal Policy Research, Roman Slobodyan, public finance expert, and Volodymyr Tsabal, MP, discuss the challenges facing the Ukrainian budget due to the war and the ways to fill it.
ROMAN
Dear friends, I am glad to welcome you to our podcast “Budget Talks”, which is produced with the support of the International Renaissance Foundation. And I would like to introduce our guest today, Volodymyr Tsabal, Member of Parliament of Ukraine of the IX convocation from the Golos party.
VOLODYMYR
I’m glad to meet you!
ROMAN
And my colleague, a person who always participates in our discussions and tells the truth, is Viktor Maziarchuk, head of the Center for Fiscal Policy Studies.
VIKTOR
Hello, friends. Yes, the truth and nothing but the truth.
Tax hikes: are there any alternatives?
ROMAN
I am very glad that we have managed to gather in such a circle today. The first fact about us is that we are all from Ternopil, and I would like to talk about this city. Or even better, about Singapore. I think Volodymyr would definitely tell us some interesting details. But our podcast is called “Budget Talks”, so today we will talk about the budget, and with whom else but with Volodymyr Tsabal, the secretary of the Budget Committee.
First question. Roksolana Pidlasa mentioned that we have a hole of UAH 500 billion this year. The government has submitted a draft law that proposes to raise taxes, including the military tax. There were many discussions: with experts, business, and representatives of the public sector. It has changed a bit, but, in fact, there will still be insufficient funds. In your opinion, what are the risks if this draft law is not adopted by the end of the year? And the second question is, what are the mechanisms other than revising tax rates?
VOLODYMYR
The changes proposed by the Cabinet of Ministers on taxes are very unpopular and very harmful to the economy, let’s be honest. To answer your question: why so late? I think there are two reasons. The first is that the changes that will be proposed have not been agreed with the state leadership, with the President, with the President’s Office, and with each other in the Cabinet of Ministers. This is an increase in VAT, an increase in the military fee, and so on. And secondly, it was not agreed with our key international partners, because we had not yet fulfilled the previous, as they call it, conditionalities, that is, the requirements for us, and it would be illogical to plan something new without doing our homework beforehand. But going back to your first question: what are the risks? Even though the things that are proposed are very unpopular (as an economist, I understand all the damage to the economy from increased taxation), but going back to what I said about financing the security and defense sector, there are no other ways. I mean, there are other ways, but they are even less popular.
VIKTOR
I must say that this year’s large deficit is also caused by the fact that at the beginning of the year Ukraine did not receive weapons from our partners, and in fact we additionally bought weapons with funds that were not originally intended for this. And this amount is almost 200 billion hryvnias. I have my own question: what to do in a situation where, on the one hand, adequate people who work with numbers understand that we need to increase taxes to be able to finance the army, and on the other hand, opposition, I don’t want to say people who advocate political and populist ideas, say: no, don’t do that, let’s make quick decisions, simple decisions… 200 billion for customs, 300 billion for taxation, and so on.
VOLODYMYR
Speaking of solutions, in fact…
ROMAN
Just what are we in danger of? If we refuse to explain it to people. We don’t raise taxes, we leave everything as it is…
VIKTOR
Then the security and defense sector will have no salaries.
VOLODYMYR
This threatens to mean that, starting in October, there will be no money to pay basic salaries to our Armed Forces, not to mention weapons and so on.
VIKTOR
And not just the Armed Forces, but several other institutions in the sector.
How to close the “hole” in the budget?
VOLODYMYR
When we talk about solutions, most often what we hear is: Let’s cut certain expenses, which sounds very logical. And almost every year, I myself always submit relevant amendments or alternative bills to the Cabinet of Ministers’ bills to reduce expenditures. This year, I have been studying the existing budget and the possibilities to reduce expenditures. The scale of how much we can reduce expenditures is about UAH 20-30 billion at most. That is, it is not comparable to the shortfall of UAH 500-600 billion that we have now. Everyone thinks: we have a big budget, we have a UAH 3.3 trillion budget, so can’t we find optimization for UAH 500 billion? But not everyone understands that 80% of these 3.3 trillion is something that cannot be reduced.
I’ll give you some examples. Let’s take 3.2 trillion, simple numbers, no details, of which 1.6 trillion is the security and defense sector, what is currently budgeted, and there is still not enough. That leaves 1.6 trillion, which is what we can work with. Of the 1.6 trillion, 400 billion is public debt service. This is the interest on loans that we pay. Moreover, this is the interest after all the restructurings that have taken place. That is, we have to pay this out of our debt. If we do not pay this, we will not receive all the international assistance. There is already 1.2 trillion left. Further, 250 billion is the deficit of the Pension Fund. Are we going to stop paying pensions or what? If we take away the Pension Fund, we will have 950 billion left. Healthcare and education are another 300 billion. That leaves 600 billion. Plus, out of 600 billion, 100 billion is assistance to IDPs and other social things. In fact, 500 billion per year of all other expenses remain, if we take away these categories. Six months have already passed, even more than six months. 250 billion remains. Is it possible to find 500 billion or 600 billion out of 250 billion hryvnias? It is not possible.
VIKTOR
You can fantasize. I like to give an example that 5-6 years ago we found 74 billion in savings in the budget of 700-800 billion. We have a lot of dreamers, but we have to work with numbers.
VOLODYMYR
I actually did this exercise. When the Ministry of Finance submitted changes to the budget, my first question was: why increase taxes so much if you can cut spending a little bit? I found about 30 billion hryvnias to be realistic – that’s the maximum. That’s if you cut even certain protected expenditures, i.e. those expenditures that cannot really be touched.
VIKTOR
There are protected expenditures, there are certain political expenditures that will be difficult to cut, and where is this balance?
VOLODYMYR
In fact, we have already spent in 2022-2023 (we – I mean as a country, I don’t mean the Verkhovna Rada or the Cabinet of Ministers), most of the most obvious things have already been cut. That is, various capital expenditures, various subventions, deputy and non-deputy. Most of all, these are actually roads.
VIKTOR
There’s very little on roads now, but there is some.
VOLODYMYR
There is a little bit, but most of the most obvious things have already been cut. Now, if we are talking about cutting costs, we need to work with such social categories as healthcare and education, and no one will do it. Are there any things left? Of course, there are. Marathons, restructuring of the coal industry, certain business support programs. Now we are talking about this cashback and so on…
ROMAN
I just wanted to say that it looks very strange when the committee first considers the issue of cashback “buy Ukrainian” and then submits a draft law and considers the issue of tax increases. Here, both business and people have a little misunderstanding.
VOLODYMYR
I don’t understand it either. But the only thing that is important to understand here is that even if all this is done (it needs to be done), the order of magnitude will be tens of tens of billions of hryvnias at most, and this will not solve the issue of financing an additional 500 billion deficit.
Procurement during the war: how to optimize government spending?
VIKTOR
And if you look at procurement? I would like to return to the topic of the PIC, which was established last year by the Verkhovna Rada. Is it possible to put things in order in procurement and ensure efficient use of funds? This means that you get the same thing for less money. First of all, I think of two reports of the Accounting Chamber on the security and defense sector. One report found violations worth 150 billion hryvnias. This does not mean that these are stolen 150 billion, that they have been withdrawn, they may be technical, something was not adopted somewhere, some legislation was not adopted, documentation was not kept correctly – this is a violation. And another (report) says that violations were found in the procurement of unmanned systems worth more than 3 billion. Have you found such key cases in your PIC that could ensure that funds are not wasted?
VOLODYMYR
Indeed, more efficient use of funds in procurement is one of the ways to save money. In our country, if I am not mistaken, more than a trillion hryvnias are spent on procurement of various goods, services, and so on (if we do not take into account military procurement). These are funds from the state budget, local budgets, and state-owned companies. The results of the one-year work of the provisional investigative commission that I headed showed that there is indeed a great potential there. That is, the potential that the spending units, i.e. government agencies and state-owned enterprises that procure, can use these funds more economically. I want to clarify one thing here, which may not be clear to everyone, that any savings still have an impact on the budget. Not a direct, indirect impact. It is not always clear, but even if a state-owned enterprise has saved on something, spent less, it does not mean that the expenses of the state-owned enterprise will be lower, it means that its profit will be higher, it means that the dividends that will be accrued to the state budget at the end of the year will be higher. So there is an indirect impact here. It is the same with the state budget. Accordingly, if funds are saved, i.e., less is spent than budgeted, it means that at the end of the year the total budget will not be fully utilized, these funds, as we say…
VIKTOR
They will remain.
VOLODYMYR
They will remain in the budget. In fact, they will. And at the end of the year, the Ministry of Finance simply redistributes them to military spending. The potential is really great, we have reviewed about 100 different cases as part of our work, i.e. 100 different procurements, there are vivid examples that everyone has heard about. For example, when they spent on the stadium, if I’m not mistaken…
VIKTOR
…150 million.
VOLODYMYR
150 million hryvnias.
VIKTOR
With a city budget like that…
VOLODYMYR
With the city’s budget…
VIKTOR
Can you tell us more about it? So you found this case, can you tell the audience about it? How did you find these examples, how did you listen to the executives of these institutions who did this, and what were the results?
VOLODYMYR
We actually had three sources of information. The first is what our investigative journalists in Ukraine are doing, and we are very grateful to all of them. There are those who take some specific cases, spin them up to the end, analyze them, and there are those who just find something and then expect certain government agencies, or, for example, bodies like our commission, to take them in detail. The second source is that we have created our own small analytical team, where we ourselves sat in Prozorro. Prozorro has a good tool that allows for more massive data analysis, called BI Prozorro, where you can select suspicious procurements based on certain criteria. And the third source is that we created a mailbox for our commission, and certain whistleblowers sent us (information). Sometimes it was disgruntled competitors, sometimes it was really someone who saw something somewhere. We realized that there would be a lot of cases, and the commission’s work was limited in terms of time and capacity. It’s just that the commission is not a body with a lot of employees; it consists of 13 MPs, and each of them has one assistant. Our main goal was to develop a certain base, to take some of the most striking examples, and then, based on this base, to develop recommendations on how to systematically solve the problems. We took the example of the stadium, which was the subject of a lot of media coverage. During the war, they decided to spend the entire city budget (more than the city budget) on the construction of the stadium. We summoned the managers, customers, the mayor of the city in question joined us via Zoom, the authorities, the prosecutor’s office, and so on, the Antimonopoly Committee, the State Audit Service, and then we asked questions as members of the Commission to understand what was wrong.
ROMAN
What are his arguments?
VOLODYMYR
Arguments…
VIKTOR
We need to develop sports.
VOLODYMYR
Approximately the right ones. In fact, sometimes there were very funny arguments. There were even arguments: we have the money, and we need the stadium, so why not spend it? There were other, more interesting cases, what is called “sharpening”. This is the most popular way to choose the contractor that…
VIKTOR
Could you please explain about “sharpening”, because it’s a specialized thing.
VOLODYMYR
How does it really work? A public procurement, a tender is announced, and certain requirements are set. Anyone who meets these requirements has the right to participate in the tender or win the tender. Accordingly, you can set the requirements in such a way that the company you want will come. For example, a company may have a certificate for a certain type of work, and this certificate is not really needed at all, but it turns out that one company has such a certificate, so it is prescribed in order for this company to win, and this happens all the time. In fact, if any person in the country can open Prozorro and look at the tender documentation for up to 10 procurements, I’m sure that in three of them they will find very interesting and incomprehensible tender requirements, where it will be unclear why, when buying a tomograph, the diameter should be exactly so many centimeters, if tomographs can be plus or minus 2 centimeters, it does not affect its operation. Because a particular company sells a tomograph with this particular diameter. This is one example. I mentioned medical procurement, which was also one of the cases we reviewed, where we took and looked at the procurement of medical equipment by local governments.
It is very important here, because we noticed that we often criticize the state, but in fact, at the central level, what happens through the State Enterprise “Medical Procurement” is that there are very good prices, the organization is already working well, they know how to organize tenders, they know how to make sure that there is competition, that the cost of procurement is minimal for the state. We also looked at private hospitals, and they also buy cheaper, and some local governments that procure for municipal institutions are much more expensive. Not all, but such cases were very popular. One of my colleagues on the commission drew attention to this. Accordingly, we worked on this case in detail. We are still working with the Ministry of Health and the Ministry of Economy to understand how to fix this situation. There are simple solutions. We recommended, for example, to think about how to make sure that at least the State Enterprise Medical Procurement is a kind of agent through which tenders are held, but everything is still very complicated there…
VIKTOR
Very, very complicated.
VOLODYMYR
It is difficult.
VIKTOR
They have money, they want to spend it.
Has the redirection of military personal income tax to the state budget been justified?
ROMAN
I will be their lawyer, for sure – local authorities and local governments. Before coming on the air today, I was also preparing, and I saw a very interesting statement. You all know the Association of Ukrainian Cities. Oleksandr Slobozhan often attends the budget committee. How do you assess the decision that military personal income tax was redirected from local budgets to the state budget? Recently, the AUC sent a request to the Ministry of Finance. (We promised not to go into details today, but how can we have “budget talks” without numbers?) And the Ministry of Finance provided information that only 45% of actual PIT revenues were used by the main spending units in January-July 2024. And the Ministry of Strategy and Industry used only 2% of the 25 billion allocated to it during this period. And this is their main idea: you see, you have taken away our funds and they are not being used effectively at the state level. Can anyone comment on this?
VIKTOR
I can comment on this. Just a few days ago, one of my colleagues had a similar question, so I went into the numbers and started looking. And recently, Oleksandr Slobozhan asked us to speak out in the same way, saying that the Ministry of Finance is not good and has taken the money. So, I want to start with the numbers. And I asked Oleksandr this question: how much were they supposed to spend? 72 million was planned for the year, but how much was supposed to be spent in 6 months or 8 months? So, this is the key question for me: have they already spent the money or is the use of the money scheduled to start later? Let’s ask Oleksandr a question: “Sasha, when were they supposed to use the money?” ”Why are you starting to do casuistry?” This is a basic question, because you understand why you need to compare, whether you are manipulating or speaking in numbers? So, in fact, according to the Ministry of Strategic Industries, the use of funds begins in the 6th or 7th month.
ROMAN
From June or July.
VIKTOR
Yes!!! And then what are we going to compare it for? And how much money were they supposed to use? That’s why I always say: friends, when we talk about numbers, let’s not manipulate them, and secondly, let’s look deeper into the subject, because it’s important. The decision on personal income tax is as complicated as possible, but it is the right one, because we had no money, while local governments, no matter what anyone told me, had money. And they used it for these cases – stadiums. I understand that Sasha is worried about this, because it is his job, and he does as much lobbying as possible, in a good way… he advocates for local governments, it is his main job. Accordingly, he has to protect them. My position is different. I look at the whole picture. I see that if there is money here, and the state… I’m sorry, colleagues, but I’ll remind you once again that at the end of October last year, the security and defense sector had no money to pay salaries to the military. There was simply no money.
VOLODYMYR
And this year, if…
VIKTOR
Now, it seems to me, according to my calculations, big problems will begin in September. They’ve done everything they could from the end of the year to bring it closer to September. Did the government do the right thing by retroactively taking it back? No, it was wrong. It was a wrong decision, but it was necessary. You may not like it, but it had to be made.
VOLODYMYR
I’ll just come from a different angle. I completely agree with the argumentation. The question is: what would have happened if we hadn’t transferred it? Because everyone thinks that if you read the argumentation in the post of the Association of Cities, it looks like this money has come to the accounts, it’s lying there, doing nothing. It’s just a budget. This is a special fund. What is a special fund? A special fund means that this particular revenue can only be used for this purpose, unlike the general fund, where the money goes into a common pot and is then distributed to everyone else. In fact, they have the ability to spend this amount that was under-spent, let’s just say, but the money is not sitting in accounts doing nothing. The money goes to a single treasury account and is then used for other purposes. My hypothesis is that even if the Ministry of Strategic Industries did plan to pay it later, perhaps the Ministry of Finance is doing exactly what I actually suggested when it was passed. Perhaps they are planning to reduce the special fund by this amount at the end of the year in order to transfer it to the general fund, conditionally for the salaries that are not enough. In fact, when this draft law was being considered to take away military personal income tax, my colleagues and I submitted an alternative one, everyone did, but I had a very simple one, I said that these 100 billion should not go to the special fund of the Ministry of Strategic Industries and the State Special Communications Service, because there are the right things there: drones, weapons, but they should go to the general fund for the Ministry of Defense.
Why? Because the Ministry of Defense will have more flexibility to spend it on what it needs, and if it doesn’t have enough, it will spend it on that. If they don’t have enough for salaries, they will spend it on salaries, if they don’t have enough for drones, they will spend it on drones. As I understood from the response of the Ministry of Finance, this is, in fact, what is happening now.
Perhaps I am wrong.
VIKTOR
I have one more question. I asked Oleksandr: how much is the contract for? I mean, here’s what’s happening. You contract for the production of drones, they deliver them to you, and then, as far as I understand, there is a postpaid payment, because this issue was raised a few months ago, I think in June, that they gave a large amount of money, but they are not used. We started to check with our colleagues. They said: we have no right to use it now, we are currently under contract. So what is going on? We should probably ask the experts who have the knowledge and access to do this correctly…
On the disadvantages of economic mobilization
ROMAN
It’s a good story about explaining, about numbers, because we’re about to start a new season, the consideration of the draft state budget. I think there may be some more surprises. We are already hearing from the government, from the authorities, that there are problematic issues, so these points need to be explained, because the position of local governments is that there are rear communities and there are frontline communities. The same Kharkiv, Zaporizhzhia. And there is a lack of funds. So thank you for giving this comment. And I would ask the same question to you as an economist. We are at war, it is clear that it is difficult for business and it is difficult for people, how do we find this balance between supporting the economy and developing it, and we understand that mobilization is needed, someone needs to defend the country, what are your suggestions on how we can balance?
VOLODYMYR
I understand that you are hinting at all these ideas of the Cabinet of Ministers and some of your colleagues from the Verkhovna Rada about economic mobilization.
ROMAN
Maybe there are other mechanisms?
VOLODYMYR
Although I am an economist by training and a very liberal person in economic terms, I am not a supporter of the ideas of economic mobilization. Maybe in the short term they will have some positive effect on budget financing, because some people will start paying more taxes, many will start coming out of the shadows. But there is also an ideological component here: we are at war with a strong enemy, and the likelihood of being mobilized should be across the country. The negative effect that can be caused by such a division between society, that you are booked or economically mobilized and you are not, will have a much more negative effect, especially given that the issue of paying taxes can be solved in other ways. There are many different ways that you can increase what is called in English compliance, the taxes that people pay out of the taxes that they should pay. I mean, there are many other ways, and the so-called economic mobilization is not the best way. This is my personal opinion. In fact, I don’t really support all these ideas that I hear. It seems to me that the positive effect they will have will be much less.
But you are right, we must now be prepared to make unpopular decisions. Those who are at war make the greatest sacrifice, and those who are in the rear must understand that they must also make certain sacrifices. Economically, there is a lot of injustice that has accumulated in the country, which can now be corrected and with the help of which it is possible to increase budget revenues to finance the army. That is, so that people in the rear understand that they are not fighting, but they will have to pay more. And the solutions that the Cabinet of Ministers is currently proposing to increase taxes are not the best, to be honest.
For example, with regard to the military fee. What is now proposed to be increased is not the most optimal solution. Or before that, we talked about increasing VAT. Let me give you an example. The increase in the military fee means that those who paid 18% personal income tax, 22% unified social tax and 1.5% military fee will have to pay 5% more. And those who did not pay, because they had half in the black and half in the gray, will continue to not pay. If you are a hired worker, but you are considered a Group 3 individual entrepreneur (I’m not talking about real individual entrepreneurs, real entrepreneurs), you will pay 6% instead of 5%. This is an example that increases injustice. Could it have been done differently? Probably, it could be done in another way. Or another example of injustice that exists. This is a very unpopular thing, it’s not customary to talk about it, because it’s actually even less popular than tax increases, the fact that we have people who are less well off and people who are very well off, and the state actually pays the difference in energy tariffs for them. Let me remind you that when we switched to market tariffs in 2015, it was a requirement of our international partners that we give you such and such funding, but you switch to market tariffs, and for all those who do not have the ability to pay, we create a subsidy program. At that time, there was a large subsidy program for 9 million people, and this program worked. The tariffs there were plus or minus market tariffs, and then until today, the tariffs have become non-market again.
And now, in fact, a person with an income of UAH 100,000 pays the same tariff as a person with an income of UAH 5,000. If it were a market-based tariff, it would be fine, but since the tariff is actually subsidized by the state, the state, instead of funding the army, is funding the electricity or gas tariff of someone who earns 50 or 100 thousand.
VIKTOR
And they can pay more.
VOLODYMYR
And they can pay more, so you can’t just say: we’re switching to market tariffs so that energy companies have more income. More revenue means more dividends to the budget, and more dividends to the budget means more funding for the army. You can’t say that. This can only be done in parallel with an increase in the subsidy program, meaning that we increase subsidies (how many now, 40 or 50? I don’t remember) to 100, so that those less able to pay can pay as much as they do now, and those more able to pay can fill the state budget.
ROMAN
By the way, are the subsidies partially financed with the help of international partners?
VOLODYMYR
Yes, they are. In full. It’s not military spending, so it’s not military spending, it’s all money…
ROMAN
Partially controlled by partners, right?
VOLODYMYR
Yes, it is.
VIKTOR
The Ministry of Finance used to provide good reports, and we should give them credit for doing so. Now, unfortunately, they don’t make good dashboards. Maybe when they hear our conversation today, they will think that they need to update them, because they used to provide very good detailed information about how the funds of our international partners are used, for which programs, the number of people who received funding, the number of pensioners who received pensions, and so on. By the way, through Diia, they conducted a survey of civil servants who received funds from our international partners and their salaries. It should be recalled that the salaries of civil servants are actually paid at the expense of our international partners. They conducted an interesting survey. Unfortunately, I have not seen the results, but…
VOLODYMYR
By the way, I have not seen this survey.
Budget 2025: Expectations and possible scenarios
VIKTOR
I think that few people realize that in reality they are paid by the funds that come to Ukraine from our partners. A few years ago, I worked in a government agency. So I was surprised to receive such a survey. And here I have a question about salaries, what should we expect in 2025? What are your expectations for the budget?
ROMAN
I’ll add, what are the scenarios that are being considered? Is it possible to voice them?
VOLODYMYR
Actually, based on what we are discussing both in the committee and with representatives of the Ministry of Finance, my personal conclusion is that I have no reason to believe that we will need less than this year. However, what the representatives of the Ministry of Finance informally communicate at various events, that we need, if I am not mistaken, $32 billion for the next year, is the need for additional funding. This year, it was $37 billion, then it was $42 billion, then it was changed to $37. But I don’t see any reason to believe why it will be 32 next year and not 37. Will our expenditures decrease in any way? The main expenditures are security and defense. Probably not. Will our revenues increase? What about taxes? Taxes will definitely increase. By how much? By UAH 130 billion, if we pass this bill, it will be plus $3 billion.
ROMAN
But it is still less than the expectations we had at first.
VOLODYMYR
I have fewer expectations, first of all, and secondly, tax increases are not just a direct increase. Anyone who has studied economics (I think the Ministry of Finance has) knows that tax increases lead to a decrease in economic activity. Accordingly, the base will probably decrease a little bit, that is, the total will be more, the base will decrease less than the rate increase, but the base will decrease a little bit from the projected one, so my personal forecast is that we need at least $37 billion in additional funding, even if we take this conservative scenario.
ROMAN
Is it realistic, in your estimation?
VOLODYMYR
What we are expecting now for those committees… how do I put it?
VIKTOR
Confirmed.
VOLODYMYR
…confirmed commitments from our partners – this is $15 billion. This is the Ukraine facility from the European Union – the amount will be $8-9 billion for the next year. We will see. This is from other international partners. From the United States, everyone knows that it is still 0. It is conditionally 15. That is, even if we take the optimistic scenario that we need $32 billion, we conditionally need another $17 billion. We need to find external financing somewhere, external financing, and this does not include domestic financing, which should also be at least at the level of this year.
VIKTOR
This year’s level.
VOLODYMYR
This is all based on the forecast that the financing needs for the security and defense sector will be the same as this year. But there is an important nuance here, I’m sorry, but we also need to increase funding for the security and defense sector, because we have inflation in our country, we need to increase funding for military salaries, we have arms purchases, we have inflation, we also need to increase, even to buy the same number of shells and equipment, we also need to increase, at least to keep it at the same level.
I think that this year will directly repeat the previous two. Even more so than 2023. Because when we were accepting for 2023, it was simply not known what we were accepting at all, not because it was not clear how much was needed, but because nothing was clear at all.
And when we adopted the budget for 2024, the situation was different – it was clear how much was needed, but it was clear that external funding was not enough, so we adopted it, realizing the real need, and now at the end of the year, at least according to my calculations, we are reaching approximately the figure that we understood at the end of 2023. And this is good news, by the way, because at least now we can at least informally understand how much we need, whereas in 2022, when we adopted the budget for 2023, there was simply nothing.
VIKTOR
There were constant changes.
ROMAN
I want to end on a positive note.
VIKTOR
Everything will be fine.
ROMAN
100%.
Why Ukraine should learn from Singapore
ROMAN
One more question. We started with Singapore, so let’s finish with it. I know you studied there. What would you transfer from their experience to us? What impressed you?
VIKTOR
The positions of three friends…
VOLODYMYR
It was a long time ago. In fact, it was the strict adherence to the rules. There is a rule for everyone: for a pedestrian, for a citizen, for an official, and if a person strictly follows the rules, then everything works in the country, because all mechanisms – both in the country and in enterprises – are built on the hypothesis that everything will be according to the rules. What struck me the most was how much this is in the DNA of people. This is actually something we can learn from them. Because all these stories about “friendship positions” and so on… Singapore is still a small country, it is a country-state, and here we should draw more of an analogy with some enterprises, with large companies. That is, for large countries like Ukraine, the Singapore model cannot be copied, it simply will not work. But there are so many things, as I said: I’m walking with my friends, it’s night, it’s dark, there are no cars, no one crosses the road. It never occurs to anyone. This struck me. Or you’re on the subway and you’re hungry, you can’t eat on the subway, you can’t eat on the train, and nobody thinks to pull out a snickers and eat, you get a fine of 1000 or 500 Singapore dollars.
ROMAN
It disciplines. Then follow the example of the Singaporeans and pay taxes. This is the most important thing, because they go to the security and defense sector. Thank you very much for this interesting discussion and, of course, I have to thank our military personnel who allow us to record these interesting conversations and share them with everyone. Glory to Ukraine!
VIKTOR
And I want to thank our defenders for the opportunity to breathe in a free country!
VOLODYMYR
I join you. Thank you for the invitation.