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surged 179.8% y/y. In addition, the revenue of budget-financed entities jumped 31.6% y/y. Administrative payments and revenue from non-commercial activities declined 16.0% y/y. “Other” non-tax revenue fell 23.6% y/y.
6.1.2 ​Budget dynamics - specific issues...
The State Duma, Russian parliament's lower chamber, approved in the first reading on September 22 a draft law introducing an elevating coefficient to the mineral extraction tax (MET) on metals and fertilizer producers. ​A week earlier, Finance Minister Anton Siluanov said that the Finance Ministry offered to raise the MET on some types of fertilizers and ore from January 1 by introducing a 3.5 coefficient. Budget revenue from the step is planned at about RUB56bn. The ministry said that the tax adjustments would raise the level of tax burden justice, and the companies will participate in the solution of state tasks, including the social liabilities fulfillment.
The oil and gas part of the new MET regime that will significantly increase tax on these products also passed its first reading a week earlier. Currently the government is in talks with most of the leading companies about fine tuning their new tax burdens.
6.1.3​ Budget dynamics - funding
The International Monetary Fund (IMF) says it is happy with the new Urkanian budget and there have been no major issues, ​says the Ukrainian finance ministry. "We work with them [the IMF], discuss the parameters of the budget, the revenues and expenditures parts. To date, they make no categorical statements about some unreasonable figures," Finance Minister Serhiy Marchenko was quoted as saying by Ukrinform on September 18. The draft state budget for 2021 envisages economic growth of 4.6% and inflation of 7.3%. Revenues for 2021 are budgeted at the level of UAH1.1 trillion ($46bn), expenditures are set at the level of UAH1.3 trillion. Investors speculate that Ukraine will not get the next tranche of IMF money this autumn due to backsliding on the reform agenda.
Dangling €1.2bn in emergency macro-financial aid to Ukraine, Josep Borrell, the EU’s de facto foreign minister, told reporters in Kyiv yesterday that the money will only be released if Ukraine gets back on track with the IMF. ​The day before, Prime Minister Shmygal called Alfred Kammer, the new head of the IMF’s European Department, and asked him to send a review mission to Ukraine. Under the standby agreement signed in June, a review mission was to come to Kyiv in the summer and a second tranche, of $700mn, was to follow in September. Now, with Western ambassadors complaining that Ukraine is backsliding on anti-corruption commitments, it seems unlikely that Ukraine will get a second tranche of IMF money this year.
Ukraine may place $1-1.5bn worth Eurobonds this fall to cover the budget deficit​ and to buy back more GDP warrants, predicts Bank of America Securities. This would follow July’s successful placement of $2bn worth of 13-year Eurobonds. That deal, at 7.25%, was three times oversubscribed. Potentially chilling foreign interest, the IMF’s planned September review of the $5bn Standby Agreement with Ukraine may be delayed, BofA warns.
41​ UKRAINE Country Report​ October 2020 ​ ​www.intellinews.com