Page 8 - UKRRptAug21

those losses from exports to Russia at the expense of the EU. But I am sure that it will happen.”
Budget looking good
The improving profits of Ukraine Inc have taken some pressure of the state budget. The just-unveiled parameters of the 2021-23 federal budget were generally in line with what was previously disclosed in the media and taken by analysts as positive.
Ukraine’s general budget deficit shrank to a UAH3.0bn deficit in March from UAH10.0bn in the prior month, according to the State Treasury. General budget revenue jumped 24.0% y/y to UAH138.3bn ($5bn), rising from 8.0% y/y in February. General budget expenditures increased 10.6% y/y to UAH116.4bn, slowing from 19.1% y/y growth in February. In 1Q21, the general budget deficit amounted to UAH6.3bn (vs. a deficit of UAH17.3bn in 1Q20).
The increasing economic activity has lead to more tax revenues and reforms to the tax service have also improved collection. As part of Zelenskiy anti-oligarch drive tax collection should improve further this year as the government has rejigged the taxes on metals that will end some of the extra low tax regimes that oligarchs like Rinat Akhmetov have been enjoying and bring over $1bn of extra revenues into the budget.
Tax revenue surged 23.0% y/y to UAH124.8bn in March, accelerating from 9.1% y/y growth in February. Net VAT revenue jumped 59.3% y/y (vs. a 12.7% y/y decline in February), as gross VAT revenue jumped 33.3% y/y and VAT reimbursement increased 13.5% y/y.
Enterprise profit tax advanced 5.7% y/y (after decreasing 25.0% y/y in February). VAT revenue from imported goods increased 39.7% y/y (vs. 19.9% y/y growth in February). The growth of revenue from personal income tax accelerated to 9.1% y/y (from 7.7% y/y growth in February).
Non-tax revenue jumped 36.3% y/y to UAH8.2bn in March (after sliding 1.0% y/y in February). In particular, the revenues of budget-financed entities surged 51.1% y/y, and administrative payments increased 9.7% y/y. Income from ownership and entrepreneurial activities advanced 3.5% y/y.
The budget revenue advanced significantly in March amid a surge in net VAT collections. The growth of budget expenditures slowed down amid the rising difficulties with budget deficit financing. As a result, the budget deficit shrank in March.
“We don’t expect the budget deficit to enlarge significantly in April. It's most likely that public expenditures have been curbed, as the situation with raising more debt for budget gap financing was difficult for most of the month,” Concorde said in a note.
2.2 Ukraine’s demographic catastrophe
Russia is facing two decades of stagnation thanks to its shrinking population as a huge dent knocked into the demographic pyramid during the chaos of the 1990s arrives in the working population cadres. But if Russia’s demographics is a disaster, those of Ukraine are a catastrophe. After the collapse of the
8 UKRAINE Country Report August 2021 www.intellinews.com