Ukraine budget revenue slows to 3.3% yoy growth in November

Ukraine’s general budget revenue slowed to 3.3% yoy
growth in November from 19.2% yoy in the prior month owing to a high
comparative base, the State Treasury reported on Dec. 26. The revenue growth
was driven by the enterprise profit tax (37.0% yoy), personal income tax (34.6%
yoy), excise duties (26.5% yoy) and value-added tax (12.4% yoy). At the same
time, dividends from the NBU plunged to UAH 5.0 bln in November from UAH 14.0
bln a year ago. Rent on mineral extraction dropped 38.3% yoy. For 11M17, general
budget revenue increased 33.6% yoy.

Spending rose only 22.1% yoy in November and a general
budget surplus of UAH 2.7 bln was reported as a consequence. The main factor
was a central budget surplus of UAH 4.1 bln, while local budgets indicated a
minor UAH 1.4 bln deficit. 

For 11M17, general budget revenue increased 33.6% yoy,
the general budget was in surplus (UAH 33.9 bln) with a UAH 5.5 bln surplus at
the central budget and UAH 28.4 bln surplus at the local level.

Alexander Paraschiy:  As we expected, budget
revenues are easing during the last months on the high comparative base. A
surge in the NBU’s dividend payments in the fourth quarter last year have
undermined the fiscal statistics.  Also, VAT reimbursement has nearly
doubled to UAH 11.4 bln in November (from UAH 6.1 bln a year ago) in what has
also reduced revenue growth rates. If we exclude these two factors, we see that
core budget revenue actually kept growing strongly. We also see that it is
realistic to reach the 28.3% yoy official revenue growth rate target set for
2017.

In regards to the 2017 budget deficit, it will be
much less than MinFin envisaged in its plans. According to the updated spending
plan, the general budget deficit will have to reach UAH 103.9 bln in 2017,
which is close to 3.6% of GDP.  However, to reach this level of expenses,
the authorities will have to disburse UAH 217.1 bln in one month after average
monthly spending through the year of UAH 81.0 bln. This kind of a spending
surge poses substantial depreciation and inflation risks.