Page 41 - UKRRptMar19

"VAT reimbursement to exporters is rising amid growing exports of agricultural produce," she added. "And we cannot ule out a situation in, which the government might resort to the practice of delaying VAT reimbursement in order to have more budget revenues in the short term."
Ukraine’s budget ended 2018 with a deficit of UAH66bn ($2.4bn) or 1.7% of GDP, that comfortably meet the International Monetary Fund (IMF) demands to hold the deficit to not more than 2.5%, the treasury reported on January 28.
The end of year general budget deficit was recorded after the government’s finances swung from profit to loss in the last two months of the year. The government reported a deficit of UAH88.3bn in December that followed from a surplus of UAH7.1bn in November, the State Treasury said.
The budget revenue increased 18.6% y/y to UAH109bn in December, slowing from 21.6% y/y growth in November. Budget expenditures rose 19.6% y/y to UAH198bn, speeding up from 16.7% y/y growth in November.
Tax revenue increased 13.3% y/y, slowing from 21.8% y/y growth in November. In particular, enterprise profit tax revenue dropped 30.8% y/y after 32.4% y/y growth in November. Personal income tax revenue slowed to 19.7% y/y growth from a 26.2% y/y improvement in November. Meanwhile, net VAT revenue jumped 48.3% y/y (vs. a 16.6% y/y decline in November) due to an 11.4% y/y decline in VAT reimbursement.
Non-tax revenue surged 42.1% y/y, speeding up from 21.6% y/y growth in November. In particular, income from ownership and entrepreneurship swelled 74.6% y/y (vs. 33.8% y/y growth in November).
All-in-all the budget posted a deficit of UAH65.9bn in 2018 amid revenue growth of 16.5% y/y and an expenditure increase of 18.3% y/y. The budget revenue met 98.6% of the 2018 plan in 2018, while expenditures were at 93.7%.
In related news, the State Treasury on January 30 reported that the state budget deficit amounted to UAH59.2bn in 2018, while the law on the state budget assumed a deficit of UAH94.1bn.
“We expected the budget deficit to swell in the last month of the year given the cautious budget spending through the most of the year. The drop in VAT reimbursement is a bit worrisome. The extension of this trend is likely to mean that the government returned to its poor habit of delaying VAT reimbursement to exporters,” Evgeniya Akhtyrko of Concorde Capital said in a note. “The 2018 state budget deficit amounts to 1.7% of GDP, according to our estimates, which comfortably meets the IMF-required threshold of 2.5% of GDP.”
Ukraine’s state budget revenue declined 1.3% y/y to UAH55.2bn in January, which is 10.8% y/y below plan , the State Treasury provisionally reported on February 1. Net tax revenue declined 13.7% y/y to UAH19.9bn (27.8% below plan) amid a VAT reimbursement surge of 64.2% y/y. Customs revenue declined 10.4% y/y to UAH22.5bn (11.8% below plan). Other budget revenue increased 15.5% y/y to UAH1.3bn (37.7% above plan). Local fiscal revenue improved 20.8% y/y to UAH19.0bn, but underperformed plan by 5.6%.
41 UKRAINE Country Report March 2019 www.intellinews.com