Kyiv City Council to approve its 2015 budget in January

The Kyiv City Council (CITKIE) will only be able to approve its 2015 budget in January, the Ukrayinska Pravda news site reported on Dec. 25, citing a council member, who pointed out that the parliament is still in the process of approving the state budget for 2015 and amendments to the budget and tax codes. Since a large part of Kyiv’s revenue depends on subsidies from Ukraine’s central state budget, which also earmarks funds for itself, the City Council’s ability to balance the budget remains uncertain. The central budget is scheduled to be approved on Dec. 30.



Roman Topolyuk: The key variable for the Kyiv budget is revenue from personal income tax, which has usually generated more than 40% of the city’s budget revenue. Kyiv had to transfer 50% of personal income tax collections to the state budget since 2011. A possible change to Ukraine’s state budget code, which was initiated by the Finance Ministry and might be approved by parliament, is that the central budget will boost confiscation of collected income tax in Kyiv to 75%.



Instead, the Kyiv city administration is insisting on full retention of revenue from this tax. Otherwise, it will need to higher subsidies from the center to survive. They accounted for 20%-40% of Kyiv’s budget revenue in 2011-13. As the Kyiv City is very unlikely to be able to limit its spending in 2015, the higher income tax withdrawals to the state budget must be accompanied by more generous subsidies from the center.



Kyiv is due to repay UAH 9.7 bln in debt in 2015 (about 60% of its annual budget revenue) and clearly won’t be able to repay it without state support. The 2015 repayment schedule includes USD 250 mln in Eurobonds (UAH 4.3 bln at the ForEx rate of UAH 17/USD) and UAH 5.4 bln in local bonds. In 2014, the city was due to repay UAH 2.6 bln, out of which it refinanced UAH 1.9 bln. The need to refinance most of Kyiv’s 2015 debt looks unavoidable right now.

Источник: Конкорд Капитал