Ukraine budget deficit reaches UAH 4.2 bln in March

Ukraine’s state budget deficit reached UAH 4.2 bln in 1Q13, compared to a UAH 1.3 bln surplus a year ago, Deputy Finance Minister Anatoliy Myarkovskiy reported on April 15. Revenue increased 8.5% yoy while spending surged 15.9% yoy.

Alexander Paraschiy: State spending growth at the year’s start is quite a different picture than we’re used to seeing in previous years. It does not look as a problem for the time being since the reported deficit is only a small part (8.3%) of the targeted deficit 2013 (UAH 50.5 bln). However, in view of the longstanding tradition of expanding budget appetites during the year, it should be viewed as a worrying signal. Still we are keeping our expectation that the state deficit will be maintained at 3.0% GDP by the year’s end, with the central bank as the main backstopper for any revenue problems.