Exchange Rate to 51.5 UAH and Tax on OLX: The Cabinet Approved the Budget Declaration 2027–2029

The Cabinet of Ministers of Ukraine approved the Budget Declaration for 2027–2029 — a key fiscal document for medium-term planning. The document, intended for use in the next three-year cycle, is based on compromises between defense needs, social obligations, and the requirements of international partners. The declaration lays the foundation for macroeconomic stability while containing a number of measures necessary to reduce the budget deficit from 18.5% in 2026 to 5.5% in 2029.

Cautious optimism amid a devaluation trend

The government updated the macroeconomic forecast, setting more moderate economic recovery rates considering the consequences of the destruction of energy infrastructure and the persistence of structural imbalances in the labor market.

The baseline scenario foresees a gradual acceleration of economic growth: real GDP is expected to grow by 4.5% in 2027, with growth rates potentially reaching 6.7% by 2029.

One of the key indicators for businesses and the population remains the exchange rate dynamics. The government forecast anticipates gradual depreciation: from an average annual rate of about 47.1 UAH per dollar in 2027 to 51.5 UAH per dollar by the end of 2029.

At the same time, inflation expectations were revised upward. According to the forecast, inflation will be 9.3% in 2027, then gradually slow to 5.1% by the end of the forecast period.

The government’s assessment combines moderate optimism about the pace of economic recovery with recognition of long-term currency and inflation risks that will continue to affect the purchasing power of the population and business investment activity.

Budget revenues and taxes: the state prepares new rules for business

The fiscal part of the Budget Declaration provides for further growth in state budget revenues and maintaining increased tax burdens on certain economic sectors. To achieve this, the government relies on implementing a set of measures to ensure financial stability and balance public finances.

Banking sector.

One of the most sensitive decisions remains the taxation of bank profits. The government proposes to maintain the increased profit tax rate at 50% in 2027. Only from 2028 is a reduction to 25% planned, which will still exceed the general corporate tax rate.

Digital platforms

For the first time at the medium-term budget planning level, the intention to introduce taxation on income received through digital platforms has been officially recorded. This concerns a 10% rate that may affect participants in the online services market, marketplaces, and digital economy platforms.

Excise harmonization with the EU

Within the framework of European integration commitments, Ukraine will continue the gradual increase of excise taxes on tobacco products and fuel. In particular, the specific excise rate on cigarettes is expected to rise to 67 euros per 1,000 pieces in 2028–2029, approaching the minimum standards of the European Union.

Military tax

The base rate will remain at 5%. For individual entrepreneurs of the first, second, and fourth groups, the tax will be 10% of the minimum wage, while for payers of the third group, the rate will be 1% of income received.

Overall, tax policy for the coming years demonstrates the government's desire to increase internal sources of budget revenue during wartime and the gradual reduction of external financial support. For business, this means maintaining a high tax burden and the need to adapt to new fiscal rules.

Budget expenditures: defense remains a priority, but focus gradually shifts to development

The expenditure structure laid out in the Budget Declaration for 2027–2029 reflects the government's desire to combine wartime needs with long-term economic recovery tasks. Despite maintaining the security sector as the main priority, increasing attention is paid to investments in infrastructure development, human capital, and entrepreneurship support.

The largest budget expenditure direction will remain the security and defense sector. In 2027, 2.76 trillion UAH is planned for these purposes. At the same time, the government forecasts a gradual reduction of this resource to 1.69 trillion UAH in 2029, assuming an improvement in the security situation and a decrease in the intensity of military risks.

The total volume of state investments during 2027–2029 is expected to amount to 270.9 billion UAH. The largest funding volumes are planned for education and science — 78.5 billion UAH, transport infrastructure — 73 billion UAH, and municipal infrastructure development — 46.5 billion UAH. This distribution indicates the government's intention to create a foundation for post-war economic growth.

Business support: focus on loans, grants, and production recovery

One of the key economic policy tools in 2027–2029 will be financing the National Development Institution, through which the state plans to continue supporting entrepreneurship during martial law and post-war recovery.

The government expects that implementing relevant programs will ensure the operation of enterprises in the most vulnerable economic sectors, support agricultural producers and industry, promote the recovery of relocated enterprises, and stimulate the return of business activity to de-occupied territories.

The "Affordable Loans 5-7-9%" program will be maintained as the main driver of stability. The main emphasis will be on instruments to reduce financing costs for businesses. A significant portion of funds will be directed to partial compensation of interest rates on loans, as well as compensation of expenses under financial leasing and factoring agreements for business entities.

An additional direction will be non-repayable state support in the form of grants. The Budget Declaration provides for annual funding of such programs in the amount of 1.37 billion UAH during 2027–2029.

Grant funds are planned to be allocated for:

• creation, modernization, and expansion of processing industry enterprises;
• development of horticulture, berry growing, and viticulture;
• creation and modernization of greenhouse farms;
• construction of vegetable and fruit storage facilities.

The government expects that the combination of loan and grant instruments will not only maintain economic activity during wartime but also ensure the creation of new jobs, increase tax revenues, and form a basis for the country's long-term economic recovery.

Social standards: gradual increase in population income

The government declares its intention to ensure the growth of social standards at rates exceeding forecasted inflation, although the real effect of such decisions will largely depend on economic dynamics and exchange rate stability.

Minimum wage

A gradual increase in the minimum wage is planned from 8,647 UAH in 2026 to 11,114 UAH in 2029. The total growth over the three-year period will be almost 29%.

Subsistence minimum

The basic social indicator for calculating a number of payments and benefits is expected to rise from 3,209 UAH to 4,151 UAH per person.

Pension provision

The declaration provides for annual pension indexation and increased spending on pension provision for servicemen. At the same time, a significant increase in unified social contribution revenues is forecast, which may reach 971.1 billion UAH by 2029.

Veteran support

One of the most dynamic areas of social policy will be veteran policy. Spending on relevant programs is planned to more than double — from 11.8 billion UAH in 2027 to 24.9 billion UAH in 2029. Funding will cover housing compensations, rehabilitation programs, adaptation, and social support for war veterans.

Overall, the budget strategy for 2027–2029 demonstrates an attempt to transition from an emergency wartime financing model to gradual restoration of the investment and social components of state policy, while maintaining defense as an unconditional priority of state expenditures.

Risks and alternative scenario

The declaration is developed based on a baseline scenario that assumes significant security improvements from 2027 but also includes a resilience scenario in case of a protracted war.

Continuation of high-intensity hostilities will require revising defense expenditures and increasing the deficit.

Further infrastructure destruction may lead to even more moderate recovery rates and increased inflationary pressure.

The ratio of public debt to GDP will peak at 114.2% in 2028, requiring extremely cautious borrowing policies.

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