Ukraine budget deficit reaches UAH 30 bln in October

Ukraine’s general budget deficit amounted to UAH 30.4
bln in October, compared to a UAH 43.9 bln in September, the State Treasury
reported on Nov. 27. Budget revenue increased 8.5% yoy to UAH 105.9 bln in
October, slowing from 10.4% yoy growth in September. General budget
expenditures surged 27.2% yoy to UAH 136.1 bln, accelerating from 23.3% yoy in
the prior month. In particular, state budget expenditures advanced 54.1% yoy,
while local budget expenditures declined 8.0% yoy.

In 10M20, the general budget deficit amounted to UAH
89.4 bln (vs. a deficit of UAH 0.6 bln in 10M19).

Tax revenue increased 10.4% yoy to UAH 96.3 bln in
October, accelerating from 9.7% yoy growth in September. In particular, personal
income tax revenue surged 17.6% yoy (vs. 4.4% yoy growth in September). Net VAT
revenue surged 51.3% yoy (vs. a 31.7% yoy jump in September), as VAT
reimbursement fell 10.7% yoy and gross revenue climbed 11.7% yoy. Meanwhile,
enterprise profit tax proceeds plummeted 40.3% yoy (vs. a 41.5% yoy decline in
September). Resource royalty payments dropped 14.1% yoy (vs. 30.6% yoy growth
in September).

Non-tax revenue dropped 5.4% yoy to UAH 9.0 bln in
October (after increasing 15.0% yoy in September). In particular, the revenue
of budget-financed entities declined 15.7% yoy. At the same time,
administrative payments and revenue from non-commercial activities jumped 22.0%
yoy.

Evgeniya Akhtyrko: As we expected, the growth
of budget expenditures reinforced in October was spurred by the populist moves
of the authorities ahead of the Oct. 25 local elections. Budget revenues
continued to swell, mostly due to high net VAT collections amid both increased
gross collections and high VAT reimbursement.

We expect the budget deficit to widen further in
November-December. However, the state budget deficit is likely to end up below the
ceiling of UAH 296.7 bln set by the budget amendments
adopted in April amid the pandemic-related panic.

However, the lower-than-expected budget deficit will
be mostly the result of the recent difficulties with finding sources for
budget financing rather than the rational attitude to
the public finances.