Ukraine’s budget revenue surged 14% yoy in 4M14

Макроэкономика 06.05.2014 State budget collections jumped 41.7% yoy in April 2014, according to Ukraine’s State Treasury report of May 5. For the first four months of the year, budget revenues equaled to UAH 120.4 bln which is 13.5% more than a year ago. VAT reimbursement for exporters was reported at UAH 13.1 bln by the end of April, which is 29.1% (or UAH 5.4 bln) less than a year ago. No other details on the April budget have yet been released. Alexander Paraschiy: The exceeding growth of budget revenues looks really impressive. For the first four months of the year, state collections added UAH 14.3 bln yoy which means that delays with VAT reimbursement could not explain such a revenue upsurge. In light of an almost 4x increase in NBU transfers to the budget in 1Q14 (UAH 15.8 bln vs. UAH 4.0 bln in 1Q13) we suspect that this source of revenue (advance profit transfers from the NBU to the budget) could also be the reason for the April state collections boom. There is some minor chance that the new tax authorities are closing tax evasion schemes but still such a positive result, if it indeed happens, could not be so immediate. In any case, from May we should see the NBU wires to be stopped (due to the IMF requests) which will give a more adequate picture of budget revenues. No doubt, in the next months, the growth in state collections will be less impressive or will even be reported as falling. Still, so far we see the outlined budget revenues target UAH 372.9 bln (+10.0% yoy) quite realistic on the back of inflation speed up and the declared tax evasions schemes’ fight.