Ukraine budget revenue drops 4% in November

Ukraine’s general budget revenue dropped 4.4% yoy to UAH
116.6 bln in November, after increasing 2.0% yoy in the prior month, the State
Treasury reported on Dec. 26. General budget expenditures increased 7.3% yoy to
UAH 123.3 bln. Ukraine’s general budget deficit contracted to UAH 6.7 bln in
November from UAH 9.4 bln in the prior month.

Tax revenue improved 3.1% yoy in November,
accelerating from 0.5% yoy growth in October. In particular, net VAT increased
almost two-fold year-on-year (vs. 10.8% yoy growth in October), as VAT
reimbursement dropped 17.0% yoy (vs. a 28.7% yoy surge in October). Personal
income tax revenue increased 13.3% yoy (vs. 16.3% yoy growth in October).
Receipts from the enterprise profit tax advanced 18.9% yoy (vs. a 69.8% surge
in October).

Meanwhile, revenue from the excise tax on domestically
produced goods fell 27.3% yoy (vs. a 6.8% yoy decline in October). Royalties
for using natural resources slid 17.9% yoy (vs. a 30.1% yoy drop in October).

Non-tax revenue plummeted 50.2% yoy in November (after
11.6% yoy growth in October). In particular, income from ownership and
entrepreneurial activity plunged 83.4% yoy (vs. a 42.3% yoy decline in
October).  The revenues of budget-funded agencies slid 0.7% yoy (vs. a
23.3% yoy surge in October). 

In 11M19, the general budget deficit amounted to UAH
5.5 bln (vs. a UAH 22.4 bln surplus in 11M18).

Evgeniya Akhtyrko: The
November budget revenue drop is the ultimate demonstration of deteriorated
budget collections in 2019. Only revenue from personal income has been
demonstrating consistent and decent growth due to the rapid rise in wages and
stable collection base. Poor budget collections prompted the government to suspend the financing of some budget items at the year end
in order to prevent the budget deficit from exceeding plan.

Given the slowdown in economic growth, the problems
with fiscal management are likely to extend into next year, despite quite a conservative budget plan. That said, we see rising risks of state officials
employing the practice of manually administering both budget collection and
spending.