State budget runs surplus in 2M12

State budget balance was positive UAH 4.7 bln in 2M12, implying a UAH 3.2 bln surplus for February alone, according to Finance Ministry data released yesterday. State budget revenue growth was strong at 16% yoy in 2M12 mainly on 18% growth in corporate profit tax proceeds.

Vitaliy Vavryshchuk: The 2M12 budget performance data is positive, as growth in revenues remains above the plan (2012 state budget revenues are expected to grow 10% yoy). With UAH 4.1 bln received from privatization as of late March (which is not treated as budget revenue), the government should have hefty cash leftover for 2Q12. With a thick liquidity cushion from 1Q12 and given that interest in local bonds (both FX-denominated and local currency) has revived recently, we are confident the government will be able to smoothly service its debt in 2Q12.