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VAT reimbursement. Customs revenue advanced 6.5% y/y to UAH26.9bn (1.1% above plan).
Evgeniya Akhtyrko: Budget revenue continues to pick up fast. According to some anecdotal evidence, the growth of VAT revenue amid the falling economy is the result of government efforts fighting pervasive corruption schemes with VAT reimbursement (the so-called “skrutka”).
We will continue to observe this trend in order to determine its legitimacy. In any case, this would be a sporadic effort that can bring only a one-off effect. Quality improvement in public finances calls for a systemic anti-corruption program, which is definitely not in the Zelenskiy administration's current agenda.
6.1.2 ​Budget dynamics - specific issues...
6.1.3​ Budget dynamics - funding
The pandemic is effecting city finances in Ukraine, warns Fitch Ratings,
which rates the bonds of eight Ukrainian cities. “Fitch estimates that the operating revenue of rated Ukrainian cities will be impacted by lower collection of personal income tax – their major revenue source,” the agency wrote. “We believe the pandemic will cause capital market conditions to tighten; this includes impaired access to financing amid undermined growth prospects and high refinancing pressure on the sovereign.”
The EU and Ukraine signed deals for loans and aid totaling €390mn ​at October 6 annual EU-Ukraine summit in Brussels. The signing ceremonies contrasted with growing warnings from aid-weary Europeans that “the EU is not an ATM machine.”
The European Investment Bank, the EU’s bank, is lending €300mn to increase the energy efficiency of 1,000 public buildings in Ukraine – schools, hospitals and cultural centres. Administered by the Communities and Territories Development Ministry, the building improvements will cut heating bills.
The EBRD is preparing a soft loan of €450mn to Ukravtodor to build a northern bypass highway around Lviv ​and to help fund the rebuilding the southern two thirds of the 475 km Kyiv-Odesa highway. Ukraine’s highway agency is to contribute €247mn to the two projects, which have a total cost of €1.1bn. In December, the EBRD Board is to vote on the loan, which is packaged as upgrading two key trade corridors in the Trans-European Transport Network.
The World Bank will loan $65mn to rebuild 183 km of roads in the government-controlled portion of Luhansk, ​Ukravtodor reports on Facebook. Three road sections have be chosen to have the maximum impact on the reviving the region’s economy by easing the export of local crops. At the same time, the World Bank will loan $35mn for farming promotion projects – a food safety labouratory and a logistics hub -- undertaken by the Ministry of Reintegration of the Temporarily Occupied Territories. Separately, Ukravtodor is negotiating with the European Investment Bank a $100mn loan for additional road projects in Luhansk and Donetsk.
37​ UKRAINE Country Report​ November 2020 ​ ​www.intellinews.com