Ukraine budget revenue surges 15% yoy in March

Ukrainian state budget revenue increased 8.5% yoy to UAH 83.8 bln in 1Q13, the state Treasury reported on Apr. 2. In March alone, growth in state collections sped up 15.2% yoy, after just 4.0% yoy growth in February.

Alexander Paraschiy: The March speed up in fiscal collections doesn’t bring any optimism to budget prospects. Detailed data is not available so far, but Viktor Pynzenyk, a former Finance Minister and opposition MP, reported that a large part of the growth was built on NBU cash injections to the budget (UAH 4.0 bln in 1Q13 vs. UAH 2.4 bln in 1Q12) and advance enterprise profit tax (EPT) payments. This message is consistent with the 2M13 budget revenue report, which showed a fast increase of income from EPT (+23.1% yoy) and from non-tax items (own revenue from state institutions and their fee collections doubled yoy in 2M12).

All in all, the preliminary March numbers support our fears that administrative levers remain the main driver of state revenue growth (refer to our April 1 news on detailed budget data for 2M13). This can last for a certain time but it’s clearly not a sustainable path.