Ukraine budget revenue rises 3% yoy in October

Ukraine’s state budget revenue rose 2.7% yoy in October to UAH 27.9 bln, the state Treasury reported on November 4. In 10M13, budget revenue increased 1.9% yoy to UAH 278.6 bln.

Alexander Paraschiy: The National Bank of Ukraine (NBU) is continuing to prop up the state budget. Already by mid-October, the NBU wired to the Finance Ministry nearly UAH 24 bln, which means that at least UAH 4.0 bln was transferred to the coffers in October, according to Anatoliy Myarkovskiy, the deputy finance minister. Therefore, the NBU was responsible for more than 14% of state revenue in October.

Importantly, according to the state budget law, the NBU was obliged to wire UAH 22.9 bln in total to the Finance Ministry by the year end. Weak tax revenue has led the NBU to meet that target already in October. Broadly speaking, that’s in line with our initial expectation that hryvnia emissions will fund state spending, with the only difference being that the newly printed hryvnias are coming to the budget as state revenue (not as money to cover the deficit through loans or bond sales). Though this accounting trick might make revenue look more robust for 2013, nevertheless we expect a significant revenue shortfall (near UAH 23 bln) with the subsequent effective state deficit at 4% of GDP.