Ukraine budget revenue surges 53% yoy in November

Ukraine’s general budget revenue surged 53.1% yoy to UAH 97.1 bln in November (vs. +30.5% yoy in October) owing to higher revenue from tax and duty collections, the State Treasury reported on Dec. 28. A 4.5x surge in enterprise profit tax collections, a UAH 14.0 bln NBU dividends wire (UAH 7.0 bln a year ago), 36.9% yoy growth in excise duties and a 36.7% yoy increase in personal income tax collections secured an impressive revenue surge. Budget spending increased 15.9% yoy to UAH 80.6 bln.

For 11M16, general budget revenue grew 18.4% yoy.

The general budget was reported at a UAH 16.9 bln surplus in November (including UAH 14.8 bln central budget surplus and UAH 2.1 bln local budgets surplus). For 11M16, the general budget deficit narrowed to UAH 10.0 bln from UAH 26.9 bln in 10M16. The central budget deficit also decreased to UAH 45.5 bln from UAH 60.3 bln in 10M16. Local budgets stayed in surplus with UAH 35.6 bln stashed in accounts. 

Alexander Paraschiy: The budget is performing stronger than we expected. Enterprise profit tax collections have already reached their full-year target in just 11 months. The Finance Ministry now anticipates state collections to rise more than 18% through the year, which is realistic. 

At the same time, we see risks of excessive spending in the last month of the year. The Finance Ministry will have to disburse UAH 167.8 bln according to its plan, which is twice more than the year’s average monthly spending (UAH 70.2 bln per month in 11M16).  For sure, some part of the outlays might not be fulfilled but still such surge in spedning is very likely to create pressure on the national currency in the upcoming weeks.

In regards to 2017 prospects, we see the outlined revenue target quite realistic amid the better performance of this year’s collections. We see a 3.0% of GDP deficit in 2017 as a safe target.