State budget deficit totals 0.8% of 2012E GDP in June

Ukraine’s state budget deficit widened to UAH 10.2 bln (0.8% of 2012E GDP) in June, taking the 7M shortfall to UAH 16.9 bln (1.3% of 2012E GDP), considerably wider than the UAH 8.6 bln in the same period of last year.

Vitaliy Vavryshchuk: Alarmingly, state budget expenditure growth (+14.4% yoy in 7M12) started to outpace that of revenues (+10.5%). Key tax collections decelerated notably: corporate profit tax proceeds were 4.0% yoy higher in 7M12 (vs. +12% in 1H12) and VAT proceeds were up 9.6% in 7M12 (vs. 13.6% in 1H12). The weaker growth was attributable to an overall slowdown in economic growth and also due to sizable advance tax payments made by the corporate sector in 1H12. The government is targeting a full-year state budget deficit of UAH 25.1 bln, or 1.7% of 2012E GDP, and the target is very likely to be missed, in our view.