In the 2nd quarter of 2014, the performance of the budget, which has already sustained some cuts, will be strained. Unfortunately, the government has failed to show significant results in countering the tax evasion schemes. Instead, the revenue on the major taxes (VAT and income tax) has continued to fall at an increasing rate against the backdrop of the escalating anti-terrorist operation (ATO). So far the government has managed to compensate this by ad-hoc measures (national currency devaluation, delay of VAT recovery, National Bank’s emission) and increase the revenue part of the consolidated budget of 2Q2014 by 7.8% as compared to the same period of 2013 to UAH 112.3 billion. However, as early as in June, for instance, the National Bank’s limit for the funding of the budget was nearly depleted. At the same time, the debt service costs and social security costs were increasing, while the military needs became a priority. In order to meet the budget restrictions, the government had to postpone many expenditure programs. The expenditures of Ukraine’s consolidated budget over the 2nd quarter 2014 were UAH 132.6 billion, which is 4.4% more than the same in 2Q2013.
For more details on consolidated budget implementation, please, see at our report “Budget Report: 2 quarter 2014”