OREANDA-NEWS. September 20, 2011. It is the first time in Ukraine that the state budget structure is based on a new management paradigm, namely "From stabilization and double dip recession resistance towards sustainable development". This was communicated by Fedir Yaroshenko, Minister of Finance of Ukraine, at the meeting of the Council of Regions chaired by President of Ukraine Viktor Yanukovych on September 15, 2011.

Fedir Yaroshenko emphasized that draft law "On the State Budget of Ukraine for 2012" was drafted in accordance with the "National Action Plan for 2011 concerning executing the 2010-2014 Economic Reform Programme", jointly with the Cabinet of Ministers of Ukraine, central executive and local authorities, trade unions and the public.

It is worthwhile to say that draft budget for the next year is based on updated legal base and drafted from budgeting innovative model with primary areas as follows:

- people’s social protection;
- innovation and investment-oriented economy growth and stability;
- predictability of the mid-term budget policy.

Due to reforms initiated by the President of Ukraine, draft budget only contains 22 text articles, compared to over 100 articles in previous years.

Besides, the Government has established and now applies the innovation model and the system of prompt reaction to the global financial crisis inclusion to Ukraine’s financial system.

The underlying tools will allow orienting the budget policy to the identified system of values, namely, social and economic development, rise of people’s living standards, and business doing facilitation.

The Minister of Finance said that next year budget innovations would accelerate the growth of our country’s competition capacity, raise its investment attraction, and make the people of Ukraine believe in the future and feel confident about tomorrow.

An important thing is that budget 2012 is based on realistic and well-balanced macro indicators:

- nominal GDP – 1505.0 billion UAH;
- real GDP growth rate – 105.0%;

Also, much of draft budget 2012 is devoted to tax policy wit its main points directed to the real economy sector development and underlying the increase of the State Budget of Ukraine 2012 forecast by 12.6%, namely:

- reducing income tax rate from 23% in 2011 down to 21% in 2012;
- extending the validity of Tax Code’s certain provisions supporting business development;
- tax preferences.

Total investment resource out of preferences for businesses makes 46.9 billion UAH, including:

- by VAT – 21.9 billion UAH,
- by income tax – 20.5 billion UAH,
- by establishing zero rate for rent taxation – 1 billion UAH,
- by exempt from import levy – 3.5 billion UAH.

A great achievement and a follow-up of the Government’s reforms is that the next year draft budget sets forth reduction of the public sector deficit down to 2.5 percent on GDP (3.5 percent on GDP in 2011).

It should be said that expenses and granted credits are expected to be in the amount of 374 billion UAH in 2012 State Budget which 29.3 billion UAH exceeds 2011 scheduled figure and 65,7 billion UAH exceeds 2010 actual figure. With all of this, the Government provides for absolute observance of rationality, priority and efficiency principles of the state budget expenditure.

In his summarizing speech Fedir Yaroshenko emphasized that the 2012 budget policy would not focus on financial resource diffusion but on priority development areas set by our country’s strategic plan.