The World Bank assesses the consequences of wage increases in Ukraine

Photo: tsn.ua

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 overall need for financing the expenditure side of the state budget to more than 13% of GDP.

An increase in the minimum wage in Ukraine from UAH 5,000 to UAH 6,500 in 2021 could increase the state budget deficit to more than 6% of the gross domestic product. This is stated in the economic survey of the World Bank, published on Wednesday, October 7.

In addition, the increase in the minimum wage will lead to an increase in the overall need for financing the expenditure side of the state budget to more than 13% of GDP.

Risks for Ukraine are associated with significant financing needs, while the need for payments on the public debt 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 in the form of additional official financing from the IMF, WB and 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, 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%.

Recall that from 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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