Ukraine budget switches to UAH 25 bln deficit in September

Ukraine’s general budget switched to a UAH 25.4 bln
deficit in September from a UAH 12.7 bln surplus in the prior month due to
increased budget expenditures, the State Treasury reported on Oct. 25. Ukraine’s
general budget revenue rose 3.7% yoy to UAH 91.0 bln in September after a
prior-month decline of 2.6% yoy. General budget expenditures increased 8.5% yoy
to UAH 116.5 bln, slowing from 12.3% yoy growth in August.

Tax revenue rose 5.3% yoy in September, speeding up
from 4.2% yoy growth in August. In particular, net VAT surged 85.1% yoy (vs. a
36.1% yoy increase in August), as gross VAT swelled 19.9% yoy (vs. 22.3% yoy in
August) and VAT reimbursement declined 4.1% yoy (vs. a 13.6% yoy gain in
August). Personal income tax revenue improved 18.8% yoy (vs. a 17.9% yoy climb
in August).

At the same time, rental payments for using natural
resources dropped 24.8% yoy (vs. a 13.1% yoy fall in August). Enterprise profit
tax revenue plummeted 40.0% yoy (vs. a 13.5% yoy increase in August).

Non-tax revenue fell 7.6% yoy in September (after a
39.7% yoy decline in August). The slide was mostly due to a 60.5% yoy plunge in
revenue from income from ownership and entrepreneurial activity. At the same
time, administrative revenue and payments increased 17.4% yoy (vs. a 10.5% yoy
drop in August).

In 9M19, the general budget surplus amounted to UAH
10.6 bln.

Evgeniya Akhtyrko: The switch
of the monthly budget balance to a deficit amid increased expenditures is usual
in Ukraine. However, we aren’t observing any significant improvement in budget
collections. Some improvement in tax collection in September was due to a
decline in VAT reimbursement to exporters.

We don’t expect the situation with budget revenue
to improve noticeably through the year end, and the monthly general budget is
likely to be in moderate deficit.