Ukraine budget revenue rises 15% yoy in July

Ukraine state budget revenue rose 15.1% yoy in July (+1.7% yoy in 7M13), the state Treasury reported on August 2.

Alexander Paraschiy: Though we anticipated a positive effect from a low statistical base on July budget revenue, the actual result was even better than our estimate. Recall that authorities approved the advanced collection of the enterprise profit tax (EPT) early this year, which should have reduced volatility in EPT revenue. In 2Q13, average monthly EPT collection was near UAH 4 bln, which promised solid EPT growth in July 2013 against modest UAH 580 mln EPT revenue in July 2012.

Yet the statistical effect can hardly be the only explanation. Given that detailed data on the budget is delayed, we can only assume two factors, which traditionally have underpinned budget revenue: a substantial donation from the NBU and/or an imports increase that improved VAT collections.

Though July revenue was encouraging, we do not see this outcome as a change in the trend as most economic sectors have not showed any signs of revival. Thus, we view the July improvement as something temporary and still expect that the accrued fiscal gap will approach 5% of GDP. The portion equal to 3.5% of GDP will be covered by cash with the remainder as arrears.