Ukraine budget switches to UAH 44 bln deficit in September

Ukraine’s general budget switched to a UAH 43.9 bln deficit
in September from a UAH 17.0 bln surplus in August, the State Treasury reported
on Oct. 26. Budget revenue increased 10.4% yoy to UAH 100.5 bln in September,
slowing from 12.8% yoy growth in August. General budget expenditures surged
23.3% yoy to UAH 143.7 bln, accelerating from 10.5% yoy in the prior month. In
particular, state budget expenditures advanced 44.3% yoy, while local budget
expenditures declined 10.0% yoy.

In 9M20, the general budget deficit amounted to UAH
59.0 bln (vs. a surplus of UAH 8.7 bln in 9M19).

Tax revenue increased 9.7% yoy to UAH 88.2 bln in
September, slowing from 10.5% yoy growth in August. In particular, personal
income tax revenue surged 17.6% yoy (vs. 4.4% yoy growth in August). Net VAT
revenue jumped 31.7% yoy (vs. a 71.8% yoy surge in August), as VAT
reimbursement fell 3.8% yoy and gross revenue climbed 10.8% yoy. Meanwhile,
enterprise profit tax proceeds plummeted 41.5% yoy (vs. a 12.9% yoy decline in
August). Resource royalty payments dropped 30.6% yoy (vs. 7.6% yoy growth in
August). 

Non-tax revenue advanced 15.0% yoy to UAH 0.5 bln in
September (after surging 35.1% yoy in August). In particular, the revenue of
budget-financed entities jumped 21.3% yoy. “Other” non-tax revenue advanced
14.2% yoy. At the same time, administrative payments and revenue from
non-commercial activities declined 13.9% yoy.

Evgeniya Akhtyrko: In
September, the authorities started to exercise their “right” of budget spending
that had been allowed by the budget plan adopted amid the pandemic panic. It’s
very likely budget expenditures in October will surge, fueled by the desire to
spike the popularity of president Zelensky’s political force – The People’s
Servant party – ahead of the Oct. 25 local elections.

The disproportion between state and local budget
expenditures, which has been observed since the end of the previous year, is
more evidence that budget resources are being actively used by central
authorities as a tool to serve their interests, to the detriment of the needs
of local communities.