Ukraine budget revenues surge 47% in June on Naftogaz dividends wire

Ukraine’s general budget revenue sped up to 46.6% yoy
growth in June from 39.3% yoy in the prior month, the State Treasury reported
on July 27. UAH 13.3 bln in dividends from Naftogaz accounted for half of the
revenue growth, in addition to UAH 5.0 bln dividends from the NBU, a 2.9x jump
in enterprise profit tax (due to Naftogaz profits) and 37.3% yoy growth in
personal income tax collections.

At the same time, VAT collections were reported in the
red (-0.6% yoy) due to a statistical effect involving VAT refunds. A year ago
in June, VAT reimbursement was at a meager UAH 0.1 bln while this year refunds
already reached UAH 9.1 bln.

Spending lagged to revenues at 27.2% yoy growth in
June.  As a result, the general budget surplus swelled by UAH 1.7 bln to UAH
52.1 bln (2.0% of GDP). Both the central budget and local budgets reported
surpluses by June at UAH 29.0 bln and UAH 23.1 bln, respectively.

In 1H17, general budget collections grew 46.1% yoy.

Alexander Paraschiy: Budget
collections growth doubled the government’s plan in 1H17. To a large extent,
that result stems from UAH 29.7 bln confiscated from ex-president Victor
Yanukovych, UAH 20 bln in dividends from the NBU and UAH 13.3 bln in dividends
from Naftogaz. Still even net of those one-off items, core revenue grew 27.5%
yoy in 1H17, much faster than targeted.

Since no extraordinary revenues like confiscation are
seen on the horizon, we expect a noticeable slowdown in collections in 2H17.
However, we still expect that annual revenue growth will stay above 20%.
Against this backdrop, we expect the budget deficit target (3.0% of GDP) will
be easily achieved.