The Monitoring of Main Indicators of Budget and Banking Systems of Ukraine

It contains a brief analysis and selections of graphs and charts illustrating the main changes occurring in the budget and banking systems of Ukraine. The publication is made possible by the generous support of the American people through the United States Agency for International Development (USAID). The contents are the responsibility of the Institute for Budgetary and Socio-Economic Research (IBSER) and do not necessarily reflect the views of USAID or the United States Government. The publication is focused on monitoring the execution of consolidated, state, and local budgets in Ukraine. In October 2011, state budget revenue intake continued to climb, with the state budget receiving Hr 249.6bn in revenue during ten months of 2011, which is 39.3% more than the respective 2010 figure. This is 83.8% of the annual plan, and given the upward trend, the annual plan can be expected to be exceeded. Tax revenue will be the main driver for exceeding the plan, with enterprise profit tax and value-added tax annual plans implemented by 87.5% and 84.5%, respectively. The level of execution of the annual expenditure plan of the consolidated budget in January-October 2011 decreased slightly compared to last year, by 0.5ppt, and amounted to 73.6%. Expenditures of the consolidated budget increased substantially in October year-on-year, having grown by 13.9%. Unlike in September, expenditures increased in nearly all areas, with growth noted in expenditures for social protection and social security, education, spiritual and physical development, healthcare, housing and communal services, environmental protection, economic activity, public order, security, and judiciary, and defense. State budget expenditures decreased slightly by level of annual plan execution year-on-year, by 2.2ppt, and amounted to 77.1%. As with previous months, in terms of expenditures for economic activity, the level of annual plan execution decreased against the 2010 figure, this time by 6.0ppt, and amounted to 70.6%. However, under comparable conditions, it decreased at a slower pace, by 3.5ppt. Despite some decline in the level of execution of expenditures for social protection, this level is usually the highest from among all the budget expenditures and it amounted to 84.8%. The State budget deficit was financed at Hr 12.3bn during ten months of 2011 or at 34.9% of the annual target. At the same time, debt was incurred at 76.4% (Hr 67.3bn), which is nearly 66.7% less year-on-year. Also, more than half (56.0%) of the borrowings were used for debt repayment. The General Fund deficit totaled Hr 13.1bn or 39.2% of the planned annual amount. The State budget deficit amounted to Hr 4.1bn in October 2011, which is Hr 0.3bn more year-on-year. Local budget revenue execution during ten months of 2011 amounted to 80.6% of the annual plan, which is one of the highest figures in recent years. A distinct slowing down of the growth pace was the main feature in the revenue intake in October, with the growth in revenues only amounting to +1.0% compared to the respective figure of 2010. A 62.1% drop in the revenue from capital transactions was one of the main factors behind this slowing down. Also, the cancellation of the tax on owners of motor vehicles and other self-propelled machines and mechanisms as called for by the Tax Code of Ukraine also had a negative impact on the revenue base of local budgets. The expenditures of local budgets increased by 17.4% year-to-date. As usual, the majority of local budget expenditures were used for society and culture. However, a steep rise of 18.3% was observed in October vs. September, which is uncharacteristic for local budget expenditures. The largest expenditures fall on intergovernmental transfers, social protection, economic activity, and general government functions.