The state budget of the period of full-scale invasion is chronically scarce and complex. We have a critical dependence on tranches from international donors; we spend the absolute majority of our own taxes and fees (more than UAH 2 trillion annually) on the defense and security sector. Under such conditions, the logic of the Cabinet of Ministers’ actions should have been clear: maximum savings of every hryvnia, strict targeting of social spending and support for businesses that generate taxes. But the reality of recent years demonstrates an amazing paradox: on the one hand, the Ministry of Finance and the Verkhovna Rada are increasing pressure on the legal sector of the economy - increasing the military levy to 5% and extending it for three years after the lifting of martial law, returning checks, etc.. On the other hand, the government decides to allocate tens of billions of hryvnias to non-targeted social programs, where money is distributed to “everyone”.

“Helicopter distributions” of billions.

The Memorandum with the IMF states: the fiscal approach must be balanced. If the state increases tax pressure on business, it is simultaneously obliged to use funds rationally and ensure strict targeting of social support, that is, to help only those who simply cannot survive without this help.

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Instead, the Cabinet of Ministers, in addition to important and useful programs like “єVіdnovlennya”, “єRobot”, “Credit 5-7-9”, “єOselya”, war risk insurance, is also launching the distribution of funds worth almost 45 billion UAH per year.

“Winter Thousand” program. The “Zimova Thousand” program provides for a one-time payment to a wide range of recipients without verification of their level of income or property status. This approach does not solve the structural problems of social protection: funds are dispersed among those who do not need support, while the most vulnerable categories - internally displaced persons (IDPs), low-income households, families of killed and wounded defenders - receive the same amount as the wealthy.. Although these 17 billion UAH of annual expenses could provide targeted monthly assistance to more than 1.7 million of the most vulnerable households throughout the year - with a real measurable social effect.

One-time payment of 1,500 UAH for 13 million citizens. The one-time payment to pensioners covered about 13 million people - almost half of the country's actual population. According to existing data, among the recipients there are more than 1.5 million people with a pension above 10 thousand. UAH per month. Introducing even minimal verification, such as checking the availability of real estate over the established norm or vehicles through accessible registries, would reduce program costs while maintaining support for the truly vulnerable.

“National Cashback” program (“єCashback”). The “National Cashback” (“єCashback”) program provides payments of up to 3 thousand. UAH per month for the purchase of goods from Ukrainian manufacturers, but its effectiveness remains questionable. For incomplete 2024, the Ministry of Economy estimated the effect of the cashback program at 0.001% of GDP, which is within the statistical error; calculations were not made in subsequent years. In addition, the program is designed in such a way that it applies to large and medium-sized businesses and does not apply to small ones (entrepreneurs on the simplified system are excluded from the program), which, in essence, discriminates against small businesses. State budget expenditures for this program are estimated at UAH 5.6 billion per year.

Alternative mathematics.

When a business sees such a distribution of resources, a logical question arises: why do we pay increased taxes and in full This looks especially cynical against the backdrop of chronic underfunding of programs that actually have an economic multiplier and can save the Ukrainian economy.

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The country's leading economic think tanks have proposed how these 45 billion UAH could be used with real benefit for the state.

Targeted assistance instead of distribution to everyone. Instead of distributing “Zimov’s Thousand” to everyone, these 17 billion UAH should have been directed to the least protected households (IDPs, large families, families of fallen heroes).

Investment and business rescue. According to the Ministry of Economy, at least 5 billion euros per year are required to launch a full-fledged war risk insurance mechanism, which will attract private foreign investors and restore destroyed small and medium-sized enterprises.. Shifting funds from distributions to the public or cashback to military insurance or compensation for small businesses shut down due to combat could generate thousands of jobs and billions in tax revenue in the future..

Recommendations from the expert community.

Expenditures on social needs have already increased by UAH 47.6 billion compared to last year and amount to UAH 468.5 billion. Today, targeted programs with proven economic efficiency are already operating in Ukraine, demonstrating a high multiplier and stimulating domestic demand, which were discussed above.

At the same time, financing of various programs without taking into account the real property status of recipients creates distorted economic incentives and neutralizes the motivation of legal businesses to become shadowy.. Therefore, leading economic think tanks suggest that the Cabinet of Ministers and Parliament try to implement the measures listed below.

Introduce mandatory verification of income and property status for participants in all mass social support programs. It is advisable to implement the procedure on the basis of the existing digital infrastructure (the Diya service and the corresponding state registers), ensuring that funds are directed exclusively to the most vulnerable segments of the population.

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Direct savings from the above programs to capitalize war risk insurance programs for small, medium and large businesses that directly ensure the preservation and creation of jobs.

Introduce quarterly public reporting by the Ministry of Economy and the Ministry of Social Policy on the effectiveness of government support programs using clear, measurable KPIs and independent data verification.

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During a period of prolonged war of attrition, the macroeconomic stability of the state directly depends on strict financial discipline. The further combination of increased fiscal burden on the real sector of the economy with ineffective distribution of budget funds creates significant risks for the financial system and the stability of interaction with international financial institutions.