Ukraine budget switches to UAH 14 bln deficit in March

Ukraine’s general budget switched to a UAH 14.3 bln deficit
in March from a surplus of UAH 4.5 bln in February amid a significant slowdown
in budget revenue growth, the State Treasury reported on Apr. 26. General
budget revenue increased 5.3% yoy to UAH 107.2 bln, slowing from 23.7% yoy
growth in February. Budget expenditures increased 1.2% yoy to UAH 121.4 bln,
slowing from 9.4% yoy growth in February.

Tax revenue rose 6.7% yoy in March, slowing from a
23.7% yoy surge in February. Net VAT revenue inched up 1.1% yoy after a 73.0%
yoy surge in February. In particular, gross VAT revenue increased 15.4% yoy
while VAT reimbursement jumped 24.8% yoy. In addition, the enterprise profit
tax declined 1.3% yoy (vs. a 7.4% yoy decline in February) and rent payments
for using natural resources dropped 19.2% yoy (vs. a 64.0% yoy surge in
February). Personal income tax revenue increased to 21.1% yoy (vs. a 23.1% yoy
rise in February).

Non-tax revenue declined 6.1% yoy, after 2.8% yoy
growth in February. The decline was due to a high comparative base in March 2018
when non-tax revenue surged due the sale of government licenses for radio
frequency resources. Meanwhile, income from ownership and entrepreneurship
surged 37.6% yoy after a 6.9% yoy decline in Febuary.

In 1Q19, the general budget deficit amounted to UAH
9.5 bln.

Evgeniya Akhtyrko: The March
general budget deficit was caused by a significant slowdown in revenue growth
because of weak growth in net VAT receipts. Such a situation is caused by the
disparity between the growth of VAT receipts and VAT reimbursement to
exporters.  The pool of VAT reimbursement to exporters grew faster than
the VAT tax base. 

We need to see the budget results for two more months
in order to determine whether there is a risk of rising fiscal imbalance.