Ukraine gov’t owes UAH 47 bln to businesses

Ukraine’s Finance Ministry owes UAH 47 bln to businesses, Deputy Minister Olena Makeyeva said on Sept. 23, as reported by Interfax-Ukraine. At the moment, the government does not have funds to redeem the liabilities in full, she said. However, parliament approved budget changes that increase the VAT reimbursement plan by UAH 7 bln.  Also the Finance Ministry is currently negotiating with the IMF to secure new funds to repay the debt, she said.

Alexander Paraschiy: The debt consists of both VAT reimbursements (about UAH 24 bln) and advance payments on the enterprise profit tax. A large part of the debt was created even before the EuroMaidan began in November 2013. The new authorities have declared their readiness to repay the debt at their soonest convenience. Yet no progress has been made. Instead, higher pensions, wages and social payments ahead of the October local elections have taken precedence.

Some ideas about a new issue of VAT bonds are circulating in government, as the head of Ukraine’s State Fiscal Service Roman Nasirov pointed out at Monday’s Concorde conference in London. However, a new issue of such instruments should be approved by the IMF, which has yet to offer a positive response. Against this backdrop, the redemption of fiscal debt to businesses does not look to be resolved in the nearest future.