Ukraine budget gains small surplus in January

Ukraine’s general budget switched to a surplus of UAH
268.0 mln in January from a UAH 88.3 bln deficit in December, the State
Treasury reported on Feb. 26. General budget revenue increased 3.6% yoy to UAH
73.9 bln, slowing from 18.6% yoy growth in December. Budget expenditures surged
46.2% yoy to UAH 73.7 bln, speeding up from 19.6% yoy growth in December.

Tax revenue inched up 2.1% yoy, slowing from 13.3% yoy
growth in December. In particular, net VAT revenue plummeted 66.1% yoy after
48.3% yoy growth in December. The decline was due to a 64.2% yoy surge in VAT
reimbursement to exporters, while gross VAT revenue climbed 8.4% yoy, keeping
the same growth rate as in December. At the same time, personal income tax
revenue accelerated to 22.8% yoy growth from a 19.7% yoy rise in December. In
addition, the enterprise profit tax surged 52.1% yoy (vs. 30.8% yoy decline in
December).

Non-tax revenue increased 21.9% yoy, slowing from a
42.1% yoy surge in December. The growth of non-tax revenue was mostly due to
unclassified “other” revenues. Meanwhile, income from ownership and
entrepreneurship declined 6.9% yoy after a 74.6% yoy surge in December.

Evgeniya Akhtyrko: The accelerated growth of budget expenditures is not a surprise as
presidential elections are approaching. At the same time, budget revenues do
not look very promising. VAT reimbursement to exporters is rising amid growing
exports of agricultural produce. And we cannot rule out a situation in which
the government might resort to the practice of delaying VAT reimbursement in
order to have more budget revenues in the short term.