Exchange rate, minimum wage, pensions: key highlights of the 2025 state budget (infographic).

The funding for the country for the upcoming year has been confirmed, as the Verkhovna Rada of Ukraine recently adopted the draft Law of Ukraine "On the State Budget of Ukraine for 2025" in its second reading and as a whole. Prime Minister Denys Shmyhal explained that all taxes from citizens and businesses next year will be directed towards the defense and security of the country. "The total resources allocated to the security and defense sector will amount to 2.23 trillion UAH. Record funds will be dedicated to the production and procurement of weapons, with 739 billion UAH earmarked for this purpose. There will also be increased funding for the modernization of our defense industry, as well as for the purchase of drones," noted Denys Shmyhal.

Exchange Rate and Minimum Wage in the State Budget for 2025

The state budget for 2025 is based on a macroeconomic forecast with an average annual exchange rate of 45 UAH per dollar. This indicates a depreciation of the hryvnia. The Ministry of Economy also anticipated a weaker exchange rate for 2024, projecting an average annual rate of 40.7 UAH per dollar. As of November 26, the average annual exchange rate in Ukraine is 40.01 UAH/USD, starting the year with an exchange rate of 38.04 UAH per dollar.

The state budget includes expected receipts of aid from foreign partners amounting to 38.4 billion dollars in 2025.

Forecasts for inflation in 2025 are particularly interesting, as the figures in the state budget do not align with the National Bank's forecast. The government believes that annual inflation will average 9.7% compared to the previous year, while the National Bank cites 6.9%. The same applies to GDP growth. The government has projected a GDP growth of 2.7% in 2025. In the National Bank's forecast, published in the October Inflation Report, it states that economic growth will accelerate to 4.3-4.6% annually in 2025 and 2026. "This scenario from the National Bank is based on assumptions regarding the maintenance of sufficient volumes of international support and the gradual normalization of economic functioning conditions, which will, in particular, facilitate the return of forced migrants and increase investments," analysts from the National Bank say.

The National Bank also reported that the acceleration of inflation in the coming months will reflect a lower supply of certain food products than last year, an expansion of aggregate demand due to significant budget expenditures, high wage growth rates, and an increase in energy deficits during the heating season. As a result, consumer inflation is expected to reach 9.7% by the end of 2024, temporarily surpassing 10% in early 2025, and slowing to 6.9% by the end of the year.

In 2025, neither the minimum wage nor the subsistence minimum will increase. Thus, the planned amounts for the subsistence minimum and minimum wage for 2025 are as follows:

• subsistence minimum for able-bodied individuals — 3,028 UAH;
• subsistence minimum for children under six years old — 2,563 UAH;
• subsistence minimum for children aged 6 to 18 years — 3,196 UAH;
• subsistence minimum for persons who have lost their ability to work — 2,361 UAH;
• minimum wage — 8,000 UAH.

Fiscal Policy and Tax Pressure: Will Taxes Increase in 2025?

The draft state budget for the upcoming year anticipates revenues of 321.8 billion UAH from personal income tax and military tax. However, these figures are calculated based on a planned increase in the military tax. Tax bill №11416д was adopted on October 10 but has yet to be signed by President Volodymyr Zelensky.

Among other anticipated major tax revenues in the draft state budget are VAT from goods imported into the customs territory of Ukraine (593.8 billion UAH) and VAT from goods and services produced in Ukraine (318 billion UAH).

How the Budget is Allocated: Distribution of Expenses in the 2025 State Budget

The largest expenditures are on security and defense, totaling 2.22 trillion UAH. Of this, 739 billion UAH is set aside for the procurement of equipment and armaments.

A total of 420.9 billion UAH will be allocated for social protection, with the largest share going to the Pension Fund for pensions (236.9 billion UAH) and assistance for individuals in difficult life circumstances, including support for children and low-income families (128.9 billion UAH). Support for veterans is planned at 10.9 billion UAH.

For educational matters, the 2025 state budget allocates 198.9 billion UAH, with more than half of this amount designated for teachers' salaries (103.2 billion UAH). Healthcare will receive 217 billion UAH, of which 175.5 billion UAH is for the Medical Guarantees Program (MGP).

Importantly, the state budget includes support for businesses—18 billion UAH is allocated for the development of entrepreneurship under the "5-7-9%" program. Additionally, 1.4 billion UAH is earmarked for business grants, and the Innovation Development Fund will receive 3 billion UAH in funding. However, funding for digitalization next year is limited to just 4 billion UAH. Local communities are also prioritized, with funding for local budgets increased to 327.7 billion UAH (+15%). The main source of this funding is the personal income tax (PIT) and additional subsidies for local budgets. Spending on anti-corruption bodies will also rise, with the National Anti-Corruption Bureau (NABU) allocated 2.179 billion UAH (up from 1.874 billion UAH in 2024).

Of course, all figures in the draft state budget will be subject to revision, as many expenditures directly depend on the receipt of financial aid from the West. But for now, the main budget has been approved and will soon be submitted for the president's signature. "In conditions of limited resources, this budget clearly defines priorities: defense, security, support for people, development, and reconstruction of the country," says Prime Minister Denys Shmyhal.