Ukraine budget switches to UAH 12 bln deficit in July

Ukraine’s general budget switched to a UAH 12.2 bln
deficit in June from a UAH 15.4 bln surplus in May, the State Treasury reported
on July 25. General budget revenue increased 2.6% yoy to UAH 101.9 bln, slowing
from 8.3% yoy growth in May. Budget expenditures advanced 11.2% yoy to UAH
114.2 bln, speeding up from 7.6% growth in May.

Tax revenue rose 8.5% yoy in June, slowing from 11.1%
yoy growth in May. Net VAT revenue plummeted 17.0% yoy after a 38.6% yoy surge
in May. In particular, gross VAT revenue increased 19.9% yoy while VAT
reimbursement jumped 41.1% yoy. Personal income tax revenue rose to 17.8% yoy
growth (vs. a 19.3% yoy rise in May). Meanwhile, the enterprise profit tax
surged 65.9% yoy (vs. a 5.4% yoy decline in May).

Non-tax revenue declined 12.7% yoy in June (vs. a 0.2%
yoy drop in May). The decline was mostly due to a 12.5% yoy decline in revenue
from income from ownership and entrepreneurial activity (vs. 4.2% growth in
May).

In 1H19, the general budget surplus amounted to UAH
20.4 bln.

Evgeniya Akhtyrko: The
situation with budget revenue looks worrisome again. High VAT reimbursement to
exporters is blurring relatively healthy collections on major taxes. In
addition, the budget revenue from income from ownership and entrepreneurial
activity is failing to demonstrate consistent growth, pointing to the shaky
position of small and medium businesses in Ukraine.

Given the significant underperformance in June’s budget
collections, the government is likely to tighten some expenditures in order to
improve the fiscal balance.