Ukraine September budget collections slow to 23.4% yoy growth

Ukraine’s general budget revenue collections slowed to 23.4% yoy growth from 31.4% yoy in the prior month owing to a lack of funds from the central bank, the State Treasury reported on Oct. 26. It was the first time since March when there was no wire of dividends from the NBU. The growth was driven by a 41.9% yoy VAT surge and a 33.1% yoy personal income tax growth. Spending grew 24.9% yoy and exceeded revenues. As a result, the general budget was reported at UAH 27.0 billion deficit, while the central budget deficit was UAH 23.5 billion. Local budgets were UAH 3.5 billion in the red. For 9M17, general budget revenues grew 41.1% yoy and the general budget was still in surplus (UAH 41.7 billion), with a UAH 15.0 billion surplus at the central budget and UAH 26.7 billion surplus at the local level. 

Alexander Paraschiy: Budget revenues slowed in line with our expectations. Despite the drop in growth rates, core revenue items kept soaring.  In October-December, we expect to see the same picture with revenues growing a bit faster than 20% yoy each month. The drop in NBU revenues will be the main reason for that: in 4Q16, the NBU transferred UAH 38.2 bln in dividends to treasury coffers, while there will be only UAH 15 bln in 4Q17.  Nevertheless, we still expect general budget revenues to meet the year-end target of 26.3% growth in 2017. Also we believe the deficit will not exceed 3% of GDP in 2017, in line with IMF requirements.