Ukraine budget revenue slows to 3.3% yoy growth in November

Макроэкономика 27.12.2017 Ukraine's general budget revenue slowed to 3.3% yoy growth in November from 19.2% yoy in the prior month owing to a high comparative base, the State Treasury reported on Dec. 26. The revenue growth was driven by the enterprise profit tax (37.0% yoy), personal income tax (34.6% yoy), excise duties (26.5% yoy) and value-added tax (12.4% yoy). At the same time, dividends from the NBU plunged to UAH 5.0 bln in November from UAH 14.0 bln a year ago. Rent on mineral extraction dropped 38.3% yoy. For 11M17, general budget revenue increased 33.6% yoy. Spending rose only 22.1% yoy in November and a general budget surplus of UAH 2.7 bln was reported as a consequence. The main factor was a central budget surplus of UAH 4.1 bln, while local budgets indicated a minor UAH 1.4 bln deficit. For 11M17, general budget revenue increased 33.6% yoy, the general budget was in surplus (UAH 33.9 bln) with a UAH 5.5 bln surplus at the central budget and UAH 28.4 bln surplus at the local level. Alexander Paraschiy: As we expected, budget revenues are easing during the last months on the high comparative base. A surge in the NBU's dividend payments in the fourth quarter last year have undermined the fiscal statistics. Also, VAT reimbursement has nearly doubled to UAH 11.4 bln in November (from UAH 6.1 bln a year ago) in what has also reduced revenue growth rates. If we exclude these two factors, we see that core budget revenue actually kept growing strongly. We also see that it is realistic to reach the 28.3% yoy official revenue growth rate target set for 2017. In regards to the 2017 budget deficit, it will be much less than MinFin envisaged in its plans. According to the updated spending plan, the general budget deficit will have to reach UAH 103.9 bln in 2017, which is close to 3.6% of GDP. However, to reach this level of expenses, the authorities will have to disburse UAH 217.1 bln in one month after average monthly spending through the year of UAH 81.0 bln. This kind of a spending surge poses substantial depreciation and inflation risks.