Ukraine budget revenue drops 1.6% yoy in January

Ukraine’s general budget revenue dropped 1.6% yoy to
UAH 72.7 bln in January after swelling 14.9% yoy in December, the State
Treasury reported on Feb. 27. General budget expenditures rose 3.0% yoy to UAH
75.9 bln after increasing 1.4% yoy in the prior month. The general budget
deficit reached UAH 3.1 bln (vs. a deficit of UAH 77.4 bln in December).

Tax revenue declined 2.6% yoy, after a 16.7% yoy surge
in December. In particular, enterprise profit tax collections dropped 4.1% yoy
(vs. a 217.7% yoy surge in December). In addition, resource royalty payments
plummeted 70.7% yoy (vs. an 11.2% yoy drop in December). The excise tax on
domestically produced goods slid 7.3% yoy (vs. a 1.5% yoy increase in
December).

At the same time, net VAT revenue surged 127.4% yoy after
52.8% yoy growth in December. In particular, gross VAT revenue rose 9.5% yoy,
while VAT reimbursement dropped 8.7% yoy. In addition, personal income tax
revenue grew 15.9% yoy (after a 17.1% yoy rise in December).

Non-tax revenue increased 7.3% yoy, slowing from 11.2%
yoy growth in December, owing to a 29.6% yoy rise in income from ownership and
entrepreneurship.

Evgeniya Akhtyrko: As we expected, the
problems with budget collections extended into the new year. The “fire brigade”
approach, which was taken in December to boost revenue, cannot be employed on a
regular basis.

Amid continuing declines in industrial
output and overall economic growth,
the government should consider a systemic and explicit cut in budget
expenditures. However, it’s difficult to predict the responsiveness of
authorities to this problem, given the high probability of government reshuffling
in the nearest future.