Ukraine general budget in deficit for second month

Ukraine's general budget revenue was UAH 48.9 bln in June, up 47% yoy compared to 31% yoy in the prior month. Spending rose 22% yoy (to UAH 55.6 bln) compared to 16% yoy growth in the prior month. As a result, the general budget balance in June was in deficit (UAH -6.7 bln) though improved from the same year- ago month (UAH -12.5 bln). The central budget balance has been in red for two consecutive months (UAH -7.3 bln in June and UAH -3.1 bln in May).

Central bank (NBU) support of UAH 5.0 bln (compared to nothing in June 2014), a 36% surge in personal income tax collected, a 30% jump in value-added tax revenue and a swelling collections from import duties (2.4x) secured almost 90% of the impressive state collections growth in June 2015. Net NBU money, general budget revenue rose 32% yoy in June, which is still an impressive result.

For 1H15, general budget collections increased 33% yoy while spending lagged at 17% yoy growth. The 1H15 general budget balance was positive at UAH 13.4 bln, compared to a UAH 19.7 bln deficit in 1H14, mainly owing to accumulations by local budgets. At the same time, the central budget posted a UAH 0.98 bln deficit for 1H15.

Alexander Paraschiy: The June fiscal statistics are much better than we expected. Our anticipated slowdown in state collections did not happen: strengthened private consumption, coupled with swelling inflation, look to be the main reason. Recall that organized retail trade has improved to a 24% yoy drop in June compared to a 31% yoy drop in March. Nevertheless, we anticipate the cumulative general budget balance to turn red in the upcoming months. Local budgets have already started spending actively and this tendency will continue.

We do not expect problems with budget implementation given strong inflation (CPI surged 57.5% yoy in June) and an improving real sector tendency as industrial declines slowed to a 18% yoy drop in June compared to a 21% yoy drop in May. We are keeping our forecast for the general budget deficit at 4.1% of GDP for 2015, which is in line with the official target.

Источник: Конкорд Капитал