Ukraine budget switches to UAH 3 bln deficit if February

Ukraine’s general budget switched to a UAH 3.3 bln
deficit in February from a UAH 6.7 bln surplus in the prior month, the State
Treasury reported on March 26. General budget revenue grew 8.0% to UAH 105.8
bln, slowing from 21.0% yoy in January. General budget expenditures jumped
19.1% yoy to UAH 116.4 bln, accelerating from 6.6% yoy growth in January.

Tax revenue increased 9.1% yoy to UAH 97.0 bln in
February, slowing from 25.9% yoy growth in January. Net VAT revenue dropped
12.7% yoy (vs. a 136.0% yoy surge in January), as gross VAT revenue inched up
1.4% yoy and VAT reimbursement jumped 15.5% yoy. Enterprise profit tax declined
25.0% yoy (after decreasing 67.8% yoy in January). At the same time, personal
income tax revenue increased 7.7% yoy (vs. 8.6% yoy growth in January).
Resource royalty payments increased 86.1% yoy (after increasing 162.4% yoy in
January). VAT revenue from imported goods increased 19.9% yoy (vs. 23.3% yoy
growth in January).

Non-tax revenue slid 1.0% yoy to UAH 8.6 bln in
February (after declining 17.8% yoy in January). In particular, the revenues of
budget-financed entities declined 4.8% yoy, and administrative payments dropped
2.5% yoy. At the same time, income from ownership and entrepreneurial
activities advanced 25.6% yoy.

Evgeniya Akhtyrko: The budget deficit was the result of accelerated budget expenditures
amid slower growth of budget revenue. The weak growth of gross VAT revenue is a
worrisome development especially amid growing VAT reimbursements to exporters.
Should this trend continue, we are likely to see a further slowdown in budget
revenue growth.