Ukraine budget switches to UAH 15 bln deficit in March

Ukraine’s general budget switched to a UAH 14.8 bln
deficit in March from a UAH 0.5 bln surplus in the prior month, the State
Treasury reported on Apr. 27. Budget revenue rose 2.6% yoy to UAH 110.0 bln in
March after 4.5% yoy growth in February. General budget expenditures rose 3.0%
yoy to UAH 125.1 bln after increasing 9.5% yoy in the prior month.

Tax revenue jumped 5.8% yoy in March, after 5.9% yoy
growth in February. In particular, net VAT revenue advanced 20.4% yoy after
swelling 80.3% yoy in February. The growth of net VAT was due to a 15.5% yoy
drop in VAT reimbursement while gross VAT revenue declined 3.0% yoy. In
addition, personal income tax revenue grew 15.6% yoy after a 12.9% yoy rise in
February. Meanwhile, VAT revenue on imported goods slid 8.5% yoy (vs. 12.8% yoy
growth in February), and local tax revenue declined 12.8% yoy (vs. 7.6% yoy
growth in February). Moreover, resource royalty payments fell 15.1% yoy (after
a 37.1% yoy drop in February).

Non-tax revenue plummeted 24.1% yoy after climbing
8.9% yoy in February. In particular, income from ownership and entrepreneurship
plunged 66.3% yoy and the collections of budget-financed entities dropped 12.3%
yoy.

Evgeniya Akhtyrko: It looks
like severe quarantine measures introduced by Ukraine’s government in
the second half of March didn’t much affect tax
collections during the month, but hit non-tax payments instead. The budget
deficit in March was moderate as the government was still committed to
restraining spending. It was until the coronavirus pandemic hit Ukraine that
the budget deficit tripled under the amended budget plan adopted on Apr.
11.

We are likely to observe month-to-month growth of
the budget deficit in the near term. April’s budget revenue will be
significantly affected by quarantine measures, while expenditures will
intensify given the need for boosted government spending to contain the
pandemic.