After a complicated process of 2018 state budget execution, the year 2019 proves to be no less challenging, with the key challenge being the peak of state debt repayment. Now that the first quarter of 2019 is closed, its key performance indicators are available for review.
In the first quarter, state budget revenues increased by 8.7% yoy to UAH 210.5 billion and amounted to 95.3% of the target indicator.General fund revenues amounted to UAH 178.2 billion, which accounts for 91.8% of the target. This result was enabled by a number of factors:
- reduction of tobacco production;
- VAT exemption of imports of solar panels starting in January 2019;
- decrease in the volume of natural gas import by Naftogaz of Ukraine;
- strengthening of hryvnia;
- overpayment of the natural gas rent in early February in the amount of UAH 0.6 billion.
VAT refund was carried out automatically and amounted to UAH 45.4 billion, which is 34.8% higher than in the corresponding period of 2018.
Wage growth contributed to an increase in budget revenues from the personal income tax by 22.4% to UAH 24.1 billion (i.e. 106% of the target). Revenues from the corporate income tax amounted to UAH 29 billion (108.5% of the targeted amount).
In the first quarter, all the necessary budget expenditures were fully and timely financed according to the payment orders. The Ministry of Finance remains committed to the uniform spending approach with the view to avoid peak payments in the fourth quarter as well as inflation and devaluation pressures.
Expenditures on defense, social protection, debt servicing and subventions to the local budgets were fully funded. In addition, in March, the government settled the issue of financing subventions from the district budgets in the areas where elections to the unified territorial communities did not take place in 2018. This enabled timely payment of wages to the public sector employees in the said communities.
According to the data of the State Treasury Service of Ukraine, state budget deficit in the first quarter amounted to UAH 25.3 billion, with an approved annual figure of UAH 90.0 billion. The deficit was financed by state borrowings. Privatization revenues amounted to UAH 184.0 million (3.0% of the targeted amount).
Overall, UAH 87.3 billion was attracted from the placement of domestic government bonds for the purposes of state budget financing, including 57.3 billion in hryvnia, 1 billion in US dollars and 38.7 million in euro. Besides, the second tranche of the loan under the World Bank guarantee of EUR 529.2 million was undertaken and external bond loans in 2018 with a nominal amount of USD 350 million were placed.
As of April 1, the funds on the Single Treasury Account amounted to UAH 14.9 billion.