OREANDA-NEWS. December 03, 2015. The Government’s draft 2016 state budget envisages an increase in social standards by 12% and a rise in expenses on national security and defense up to UAH100 billion. Prime Minister of Ukraine Arseniy Yatsenyuk said this at a government meeting.

He recalled that one of the main criteria of obtaining by Ukraine of the IMF third tranche as well as general support from foreign creditors in the amount of \\$ 4 billion "hinges on equilibrium and economic efficiency of tax reform and the law on the state budget."

One of the basic criteria of the draft budget, which is under consideration by the Government, is a budget deficit at 3.7% of GDP.

"We propose to carry out a drastic tax reform that will help small and medium businesses to develop, create jobs, boost its economic activity, and consequently - increase revenues both in their business and the state budget," underlined the Prime Minister.

He stressed that this required a significant reduction in expenditures of the state budget: "The Government has embarked on a very adequate reduction of state budget expenditures."

Arseniy Yatsenyuk also emphasised that by deciding to reduce government expenses the Government would not cut social expenses and "social standards would be increased by 12% in 2016, according to the government’s draft."

The main item of expenses, Arseniy Yatsenyuk recalled, lies in the national security and defense area: "The Russian aggression against Ukraine and Russian war against Ukraine is not completed. That is why the Government proposes to increase funding of national security and defense by 10 billion."

Thus, the total amount of funding for national security and defense from the general and special fund will make up UAH100 billion.

The Government also plans to significantly increase funding for capital expenditures and regional development, including united communities: "Total funding from the regional development fund will amount UAH 5.7 billion. This money will go to the local needs: hospitals, schools, infrastructure, roads. This is what communities need today."

Arseniy Yatsenyuk also underlined that the Ministry of Finance of Ukraine together with Western experts worked out "a fundamental and effective tax reform": "We are ready for a full dialogue with our coalition partners. As to the best initiatives from MPs of Ukraine, which lie in the sphere of tax administration, transparent and effective system of reimbursement of VAT in order to avoid any manual control of the VAT refund - we support all these initiatives and they will be included in a draft Tax Code, which must be supported by Ukrainian MPs."

"We welcome the desire of coalition partners to make their own suggestions. I hope that during this week we will complete all technical consultations with MPs of Ukraine, it will be much greater interest in real cooperation with the Government, no one will be politically interested in objecting to the tax reform offered by the Government and required by the country as well as the budget that meets both the basics of financial stability and social criteria that have to be provided by the Government. And we will vote the relevant bills in the walls of Ukrainian Parliament in coordination, actively and for the benefit of the Ukrainian people," he pointed out.