Ukraine budget deficit contracts to UAH 9 bln in October

Ukraine’s general budget deficit contracted to UAH 9.4
bln in October from UAH 25.4 bln in the prior month due to lower budget
expenditures, the State Treasury reported on Nov. 25. Ukraine’s general budget
revenue rose 2.0% yoy to UAH 97.6 bln in October, slowing from 3.7% yoy growth
in the prior month. General budget expenditures increased 11.6% yoy to UAH
107.0 bln.

Tax revenue inched up 0.5% yoy in October, slowing
from 5.3% yoy growth in September. In particular, net VAT growth slowed to
10.8% yoy (vs. a 85.1% yoy surge in September), as VAT reimbursement increased
28.7% yoy (vs. a 4.1% yoy decline in September).  Royalties for using
natural resources dropped 30.1% yoy (vs. a 24.8% yoy fall in September).

Revenue from the excise tax on domestically produced
goods declined 6.8% yoy (vs. a 4.1% yoy decline in September). Personal income
tax revenue increased 16.3% yoy (vs. a 18.8% yoy jump in September). Receipts
from the enterprise profit tax surged 69.8% yoy (vs. a 40.0% drop in
September).

Non-tax revenue jumped 11.6% yoy in October (after a
7.6% yoy decline in September). The growth was mostly due to a 23.3% yoy surge
in revenue of budget-funded agencies.

In 10M19, the general budget surplus amounted to UAH
1.2 bln (vs. a UAH 15.3 bln surplus in 10M18).

Evgeniya Akhtyrko:  These
figures prove our prediction that the general
budget will continue staying in moderate deficit amid weak growth of budget
revenue. Indeed, the jump in VAT reimbursement negatively affected overall tax
collections in October. By and large, only revenues from personal income have
been demonstrating consistent and decent growth due to the fast increase of
wages and stable collection base. 

As previously, we do not see any way for budget
collections to improve through the year end. Therefore, we expect the
government will be very careful with budget expenditures, keeping capital
budget outlays at a minimum.