Budget Chronicles: 3rd Quarter, 2014
In the third quarter of the 2014, four topics in the fiscal arena came to the fore in Ukraine: the impact of higher taxes on budget revenues, budgetary relations with the occupied territories of eastern Ukraine, the impact of fiscal policy on the local currency’s destabilization and the beginnings of a new budget being formulated for 2015.
The consolidated budget’s revenues for the 3rd quarter of 2014 totaled 115.6 billion UAH, which is 0.7% more than the 3rd quarter of 2013. This figure takes into account the fact that in August of this year, Ukraine was the recipient of aid in the form of a grant from the European Union. The introduction of an income tax on interest from bank deposits and collections for the military, as well as increased rates in fees payable for the extraction of mineral resources have helped to slightly bolster state revenues.
The consolidated budget’s expenditures for the 3rd quarter of 2014 was 119.8 billion UAH, which is 0.1% less than it was in the 3rd quarter of 2013. Savings were made possible thanks in part due to funding being cut off to the occupied territories of Eastern Ukraine and annexed Crimea, changes in the budget itself, as well as underfunding a few other areas. Thus the government was able to save some resources to finance the nation’s defense forces.
The consolidated budget’s deficit for the 3rd quarter of 2014 grew to 12.1 billion UAH — or 3.3% of GDP — which is approximately two times more the deficit recorded last year during the same period of time. Thus, according to the results garnered from January-September 2014, the consolidated budget’s deficit reached 3.1% of GDP overall, which is less than had been calculated according to the annual budget plan and did not exceed 5.8% of GDP (the threshold set by the IMF). At the same time, the budget’s failure to perform according to plan is a kind of hidden deficit itself.
For more details about the implementation of the budget in the third quarter of 2014, read our traditional report “Budget Chronicles: 3rd Quarter, 2014”.