Free public transportation in Kyiv: economist points to risks due to budget deficit

Free public ground transportation in Kyiv, which Volodymyr Zelensky assigned to establish, could become a serious financial challenge for the state. Economist Oleg Ustenko said that local budgets do not have enough resources to cover additional costs, and the central budget is already suffering from a colossal deficit. In his assessment, Ukraine risks ending the year with an economic contraction and inflation at 12%.

The idea of introducing free travel on Kyiv's ground public transportation could mean an additional financial burden on the state and the capital. Despite the social appeal of the initiative, its implementation will require substantial funds that are currently lacking for both the central and local budgets.

Economic expert Oleg Ustenko spoke about the financial risks of the presidential initiative on the air of 24 Channel.

Free transport: who will pay for the transportation?

According to the economist, lowering service costs for the population usually has a positive social effect. However, in wartime conditions and with a large deficit in state finances, implementing such programs requires a separate funding source.

Ustenko emphasized that local budgets are also in a difficult position, so it is impossible to shift additional costs onto them without appropriate compensation from the state.

“Our deficit in the national budget is colossal,” the expert noted.

He also drew attention to the situation with external financing. Of the 52 billion dollars of annual international assistance that Ukraine was forecast to receive, according to his data, the country received only 26 billion dollars. The rest of the necessary funds is becoming increasingly difficult to secure.

The economist emphasized that if local budgets cannot cover the additional costs, funding will have to be sought at the central level. However, the national treasury already has a significant deficit.

The economy could end the year with a contraction.

Separately, Ustenko drew attention to the deterioration of macroeconomic forecasts. According to him, the National Bank of Ukraine revised its growth expectations and now forecasts a drop in GDP of 0,4% for the year.

For comparison, the state budget assumed economic growth of 2,5%.

The inflation forecast also worsened. If earlier they expected a figure of less than 6%, now it could rise to 12%.

In the expert’s view, under these conditions the state has to review expenditures and cut capital investments, prioritizing the security and defense sector.

Ustenko urged not to count on optimistic scenarios and to take into account the risks associated with continuing Russian attacks on Ukraine's economic infrastructure.

Will international aid save the situation?

The economist also rated skeptically the prospects of Ukraine receiving all the necessary financial support from international partners. In particular, he questioned the possibility of fully meeting an additional request for 70 billion euros.

Among the reasons are internal financial problems of European states and political processes, including elections.

At the same time, Ustenko believes that substantial reserves to fill the budget are hidden within Ukraine itself—the fight against corruption, criminal schemes, and the shadow economy.

In his assessment, the share of the shadow sector may exceed 30%, and the volume of economic activity outside formal accounting is at least 60 trillion dollars per year.

What is known about free travel in Kyiv?

8 November Volodymyr Zelensky instructed the Cabinet of Ministers to develop a program of free travel on Kyiv’s ground public transport. The president also tasked them with creating a reserve of buses in light of disruptions in the metro and problems with transportation across the Dnieper.

The next day, Kyiv Mayor Vitali Klitschko said there were difficulties implementing the transport plans. He said the city critically lacks drivers for additional routes, in particular due to restrictions on hiring workers.

Additionally, the state owes the capital more than 8 billion hryvnias in compensation for passenger transport for privileged categories of citizens.

Thus, the issue of free travel in Kyiv remains not only social but also a financial challenge. To implement the presidential initiative, the government will need to determine sources of compensation to carriers, since without additional funding the new costs could become unbearable for the city budget.

Previously, StopKor reported that Kyiv was considering implementing a 45-minute transfer ticket in city transport, which would allow passengers to change between buses, trolleybuses, and the metro without paying again. The author of the petition explains the initiative would impose additional costs on left-bank residents during air raid alerts and bridge closures. For consideration by the Kyiv City Council, the petition requires 6000 signatures.