Ukraine budget deficit doubles in 2M14

Ukraine’s budget deficit reached UAH 5.4 bln by the end of February, the Finance Ministry reported on March 31. The deficit is more than double the UAH 2.2 bln fiscal gap reported at the end of February 2013.

Alexander Paraschiy: The growing deficit was quite predictable against the backdrop of poor fiscal collections (-3.9% yoy for the first two months). Given the 2014 deficit target was initially close to the 2013 level (UAH 63.8 bln vs. UAH 64.2 bln a year ago), the doubly worse result for 2M14 might lead to quite unpleasant results by the year end. Though the rate of fiscal gap expansion is somewhat disturbing, we anticipate it will slow in light of recent budget spending cuts and higher taxes.