Ukraine budget revenue falls 6.6% yoy in April

Ukraine’s state budget revenue increased 4.9% yoy in 4M13, the State Treasury reported on May 13.  April state collections shrunk 6.6% yoy vs. 15.2% yoy growth a month ago.

Alexander Paraschiy: The April revenue decline is in line with our vision of the country’s fiscal stance. A temporary upsurge in enterprise profit tax collections at the year’s start stemmed from advance payments and could not extend beyond 1Q13. At the same time, the key source of tax revenue in Ukraine – VAT – was reported to have increased only 0.2% yoy in 1Q13. 

Still, it is too early to talk about serious risks to the budget during the upcoming months. Firstly, authorities are reimbursing record high volumes of VAT to exporters, which might be stopped at any moment to replenish coffers. Secondly, MinFin always has it back covered by the NBU to support the budget either through a state bonds purchase or through direct injections of cash. At the same time, we recognize the risk of a much wider 2013 state budget deficit than the government’s initially targeted 3.1% of GDP.