Ukraine budget revenue drops 7% in January

Ukraine’s state budget dropped 7.0% yoy to UAH 50.7 bln
in January, which is 21.5% below plan, the State Treasury provisionally
reported on Feb. 3. Net tax revenue rose 12.4% yoy to UAH 22.4 bln (20.7% below
plan) amid 1.9% yoy growth of gross tax revenue and a 8.7% yoy fall in VAT
reimbursement. Customs revenue plummeted 19.5% yoy to UAH 18.1 bln (30.4% below
plan).

Local budgets’ fiscal revenue improved 13.3% yoy to
UAH 21.5 bln in January, which is 7.4% below plan. Social payments (pension and
other social fund contributions paid by employers) advanced 14.9% yoy to UAH
22.0 bln.

Evgeniya Akhtyrko: As we expected, the
problems with budget collections extended into the new year, and we are not
likely to see any significant improvement in the nearest months. The decline in industrial output
is hampering growth in tax revenue, while the current efforts in fighting
contraband and corruption in customs are likely to take quite a long time
before the positive results of reforms are to be seen.

The poor budget performance has already become fodder
for criticizing, and even bullying, the Honcharuk government by different
groups of interests, including those within the People’s Servant parliamentary
faction who are unhappy with its pro-market and Western-oriented approaches. If
the problems deepen, the Cabinet will have to resort to a systemic and explicit
cut in budget expenditures. And unfortunately, this is likely to cause even
more criticism, often unfair, of the government’s inability to perform its
functions.