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Government plans to increase the “minimum wage” will increase the need for loans to 13% of GDP, according to the World Bank
The increase in the minimum wage will lead to an increase in the general need to finance the spending side of the state budget to more than 13% of GDP.
An increase in the minimum wage in Ukraine from 5,000 UAH to 6,500 UAH in 2021 could increase the state budget deficit to more than 6% of gross domestic product. This is confirmed by the World Bank economic survey, published on Wednesday, October 7.
Additionally, the increase in the minimum wage will lead to an increase in the general need to finance the spending side of the state budget to more than 13% of GDP.
The risks for Ukraine are associated with significant financing needs, while the need for state debt payments in 2021 and 2022 will exceed 7% of GDP, according to the World Bank.
At the same time, Ukraine expects to receive 2.9 billion dollars in the form of additional official financing from the IMF, the World Bank and the EU by the end of this year. If they are delayed, the government will have to limit spending or borrow more domestically, the World Bank said.
Earlier, the Deputy Governor of the National Bank of Ukraine, Dmitry Sologub, said that after raising the minimum wage by 30% in 2021, the average wage in the country is expected to grow by 15%.
We will recall, since September 1 in Ukraine, the “minimum wage” was increased to 5000, and next year a double increase is expected: from January to 6000 UAH, and from July to 6500 UAH.
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