Ukraine budget revenue drops 3.6% yoy in April

Ukraine’s general budget revenue declined 3.6% yoy in
April from 30% yoy growth in the prior month owing to a high comparative base,
the State Treasury reported on May 25. Recall, budget revenue surged 32% m/m in
March 2017 owing to one-off proceeds related to the confiscation of USD 1.1 bln in assets
belonging to the entourage of Ukraine’s former president Viktor Yanukovych.

Meanwhile, tax revenue swelled 28.5% yoy in April.
Growth in net VAT receipts (by almost six times yoy), receipts from personal
income tax (21% yoy growth) and rent payments for the use of natural resources
(8% yoy) outweighed declines in enterprise profit tax (-23% yoy) and excise
taxes (-17% yoy).

A general budget surplus of UAH 3.2 bln was reported
as a consequence of the higher revenue despite a 40.5% yoy surge in budget
expenditures in April. The central budget reached a surplus of UAH 31.3 bln,
while local budgets indicated a deficit of UAH 28.1 bln.

For 4M18, general budget revenue increased 7.6% yoy,
while the general budget posted a minor deficit of UAH 130.5 with a UAH 92.7
bln surplus at the central budget and UAH 92.6 bln deficit at the local level.

Evgeniya Akhtyrko: While the
drop in April’s budget revenue was expected given the high comparative base of
the previous year, drops in enterprise profit tax and excise tax revenue look
worrisome. Higher net VAT receipts is due to slowing growth in reimbursements
after significant growth in the previous year. Significant underperformance of
local budgets is another source of concern.

We see increasing risks of the budget being
imbalanced further through the year end amid the uneven budget revenue demonstrated
and growing tension between MinFin and
the Cabinet,
which could result in higher public spending and a growing budget deficit.