Page 40 - UKRRptJun19

The positive news is that the revenue target is relatively modest and presumes only a 10.1% y/y increase through the year. With inflation near 6% and real growth above 2%, potential underperformance looks manageable.
Ukraine's budget falls short of over US$607mn in revenue in first four monthsюThe revenue of the budget over the period under review was US$12.15bn.
Naftogaz group paid UAH37.2bn of taxes and duties to the state budget in January-April 2019. Revenues from Naftogaz group exceeded 16.5% of total state budget revenues in January-April 2019. Naftogaz group remains Ukraine’s biggest taxpayer. In 2018, the group paid UAH137.8bn of taxes and dividends to the state budget.
Ukraine’s general budget switched to a UAH14.3bn deficit in March from a surplus of UAH4.5bn in February amid a significant slowdown in budget revenue growth, the State Treasury reported on April 26. General budget revenue increased 5.3% y/y to UAH107.2bn, slowing from 23.7% y/y growth in February. Budget expenditures increased 1.2% y/y to UAH121.4bn, slowing from 9.4% y/y growth in February.
Tax revenue rose 6.7% y/y in March, slowing from a 23.7% y/y surge in February. Net VAT revenue inched up 1.1% y/y after a 73.0% y/y surge in February. In particular, gross VAT revenue increased 15.4% y/y while VAT reimbursement jumped 24.8% y/y. In addition, the enterprise profit tax declined 1.3% y/y (vs. a 7.4% y/y decline in February) and rent payments for using natural resources dropped 19.2% y/y (vs. a 64.0% y/y surge in February). Personal income tax revenue increased to 21.1% y/y (vs. a 23.1% y/y rise in February).
Non-tax revenue declined 6.1% y/y, after 2.8% y/y growth in February. The decline was due to a high comparative base in March 2018 when non-tax revenue surged due the sale of government licenses for radio frequency resources. Meanwhile, income from ownership and entrepreneurship surged 37.6% y/y after a 6.9% y/y decline in Febuary.
In 1Q19, the general budget deficit amounted to UAH9.5bn.
The March general budget deficit was caused by a significant slowdown in revenue growth because of weak growth in net VAT receipts. Such a situation is caused by the disparity between the growth of VAT receipts and VAT reimbursement to exporters. The pool of VAT reimbursement to exporters grew faster than the VAT tax base.
Ukraine's 4M19 state budget revenue rose 18.2% y/y to UAH322.6bn, which is 4.8% below plan, the State Treasury provisionally reported on May 2. Net tax revenue increased 3.0% y/y to UAH125.1bn (7.2% below plan). Customs revenue increased 1.9% y/y to UAH101.0bn (9.9% below plan). Meanwhile, special fund revenue jumped 68.0% y/y to UAH40.3bn.
In April alone, Ukraine’s state budget revenue rose 41.2% y/y to UAH111.9bn, which is 4.1% y/y below plan. The growth was mostly due to a 252% y/y surge under the line item of “other ministries and government agencies” to UAH49.6bn. In addition, special fund revenue jumped 33.2% y/y to UAH7.8bn.
40 UKRAINE Country Report June 2019 www.intellinews.com