Miracle billions: the Ukrainian economy is preparing a big surprise

Чудо на миллиарды: украинская экономика готовит большой сюрприз

© 2019 AFP / Sergei Supinskythe State Treasury service of Ukraine has posted information about the execution of the revenue part of the state budget in 11 months. But here’s the PR on these data, no one in the Treasury, and the Ministry of Finance nor the government did not. Although if there was a possibility it would certainly happen.
Alas, the budget is executed badly. The shortfall in current revenue in the General Fund budget for the 11 months amounted to 51 billion hryvnia. Instead of 843 billion collected 792.In recent months, the shortfall exceeds six billion. In particular, in September, the state Treasury received less 6.7 billion, in October to 7.4 billion in November and 6.1 billion.Recently, Parliament has carried out a sequestration of the budget to $ 20 billion. But the trend is that even the pared-down budget for the year made will not be exact. The shortfall in its revenue items total about 55 billion, or six percent of the curtailed plan.
This means not only the need to reduce expenditures or increase borrowing, but also casts doubt on the implementation of the revenue plan in the budget 2020: it for the General Fund planned revenue growth sekvenirovanie plan 2019 at seven percent, and it now appears that from the fact he will have to be more than 14 percent. That does not fit even with the optimistic plans of the government relative to economic growth.The budget situation would be even worse if not “helped” by the national Bank. He this year has poured into the budget of almost 65 billion hryvnia in terms of 47.6 billion.We are talking about paying them the profits. In fact, the Russian Central Bank also lists 90 percent of its profits to the Federal budget (in Ukraine the percentage is not legally fixed). But in recent years due to the sufficient liquidity of the Russian banking system profit he has not. But Ukrainian colleagues manage to generate more than seven percent of revenues, paid primarily from the huge mass of government bonds in their balance sheet. That is, without “active participation” of the National Bank, which all the money poured in the period two election campaigns, the hole in the revenue side of the Ukrainian budget would be a further 17 billion hryvnia more, and even after the sequestration would amount to over 70 billion.
By the way, as a result of tricks with the dollar and the pyramid of government bonds in the current year the national Bank may receive a much smaller profit. In the first nine months it amounted to 30 billion hryvnia. In the revenue part of the budget for next year laid 40,7 billion revenue from it. But even they are questionable.Such a serious dependence of state budget from such a kind of source of anything good is not in itself in principle.Well, excluding natsbankovskih funds next year’s budget will have to grow up not even 14%, and almost 20% of that without the promotion of inflation it is absolutely unreal.As for the more traditional income budget, it is evident the disaster with the customs payments. And it’s not even that in the first 11 months of the customs received only 89 percent of the target and the shortfall amounted to almost 36 billion. Another noteworthy that the customs payments for the first 11 months of this year was 20 billion, or 6.4 percent, lower than in the same period of 2018.Of course, the Ukrainian customs officials attribute the shortage to a sharp strengthening of the hryvnia, which is from 1 January to 1 December of the current year amounted to almost 14%. But if it is to compare course on the dates indicated. The average hryvnia exchange rate for 11 months of the year 2019 turned out to be stronger than the average rate for 11 months in 2018 is only four percent. And imports compared to last year increased by eight percent. For anyone who mastered the basics of arithmetic, it is clear that with the fall of four percent and import growth at eight percent, ceteris paribus customs revenues were to grow. Even without the fight against corruption, grey imports and smuggling, on which the newly elected President Zelensky started talking back in June, when it made a rapid RAID in the West Ukrainian customs. In fact after six months of presidency takes place a large “shadowing” customs flows by about ten percent.
The Ukrainian tax authorities in General, things are better. In 11 months they lost only 7.3 billion hryvnia. But then confuses the tendency — of this amount, 5.7 billion are unable to collect in November. This is not surprising due to the fact that the Ukrainian economy that autumn has started to “cough” as a result of exchange rate experiments on her. But promised the elimination of shadow markets and charts, and I say, of course, is not necessary.It’s all going to be doing in the Ukrainian government?First of all, clearly decided to build the pyramid of government bonds further. If for the whole of November was borrowed slightly less than 11 billion, 3 and 10 December, two attempts have borrowed 9.1 billion.At this rate of placement of bonds by the end of the year instead of the planned borrowing on the domestic market in the amount of 202 billion hryvnia, the Ukrainian government can reach 335-340 billion. While total borrowing in the country and abroad can make 410-415 billion and to be at the end of 85-90 billion hryvnia over the plan.
By the way, this amount of borrowing is about 42% of all planned expenditures.Actually, this should cover how the shortfall of revenues to the budget, and disrupted plans for privatization proceeds. The only question is, will have time to spend frantically to borrow money. For the first 11 months of the expenditure budget was not fulfilled 71 billion. To meet the budget at year-end, in December it is necessary to spend almost 150 billion — twice more than the average in the month before.The data on itemized implementation costs are made public only after ten months. However, they allow you to understand what a major expense will not be met in 2019.In the first place, oddly enough, the article “Development, procurement, modernization and repair of weapons, military technology and equipment”. For the first ten months it is mastered 9,7 billion from 17 billion envisaged for the year. Next is the program of financing of purchase of drugs — for ten months it funded a 3.2 billion from $ 6.6 billion envisaged for the year. Subsidies to the regions for socio-economic development and population for the purchase of fuel is also not good. These programs are made for ten months from 2.8 to 4.8 and 1.7 three billion respectively. A serious backlog and plans to support farmers.And yet amid the debt pyramid and unrealistic plans for the collection of budget revenues next year, the current underfunding may be flowers.Berries will be in 2020.Sergey Levchenko

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