Budget barometer: Ukrainian state budget unexpectedly reached a surplus in March
21 April 10:56
Last month’s actual budget revenues exceeded expectations by 5% and amounted to UAH 320.8 billion, and the main role in achieving this result belongs to tax revenues and the expected grant from the International Bank for Reconstruction and Development. This is stated in the March Budget Barometer by the Center for Public Finance Analysis of the Kyiv School of Economics (KSE), Komersant ukrainskyi reports.
Thus, as noted in the review, revenues exceeded expenditures by UAH 2.6 billion, despite the projected deficit of UAH 0.4 billion.
What were the main achievements and losses of the budget?
The largest overperformance was recorded due to net revenues from domestic VAT (plus 23.7%), personal income tax and military duty (plus 11.5%), and income tax (plus 5.9%). Excise revenues also slightly exceeded the plan (plus 4.1%).
At the same time, the budget did not receive 17.3% of customs duties and 39.3% of rent payments due to overestimated expectations and a drop in subsoil production caused by shelling. Expenditures amounted to UAH 317.4 billion (plus 4.1% to the plan). The actual figures exceeded the plan for the first time since the beginning of the year.
In March, pensions were indexed by 11.5% to reflect inflation and wage growth. Payments increased by an average of UAH 556, and their average amount increased from UAH 5789 to UAH 6,345 since the beginning of the year. Most pensioners received an increase of UAH 100 to UAH 1,500.
How foreign partners help
International support has remained a significant source of revenue after the funding interruption in February.
In March, the treasury received $3.2 billion in loans, including $400 million from the IMF. At the same time, in early April, Ukraine received another €3.5 billion from the EU under the Ukraine Facility program (€3.1 billion in loans and €400 million in grants). By the end of the year, total support under this program should reach €12.5 billion.
What to expect in the future
In the second half of 2025, the state budget may receive additional revenues due to legislative changes.
In March, a gradual increase in excise taxes on tobacco products came into effect, with rates to rise until 2028. It is expected that this decision will provide the budget with at least UAH 29 billion in additional funds.
The government plans to finalize the new Customs Code by the end of April. The document should be as close as possible to EU standards. Its adoption is expected to reduce customs violations, facilitate trade, and increase customs revenues to the budget.
The NBU’s estimates are also optimistic
According to the NBU’s April macroeconomic and monetary review, general fund revenues (excluding grants) resumed growth in March (by more than 38% yoy), in particular due to tax revenues.
The growth in revenues from key taxes was driven by higher tax rates and better administration, as well as by improved financial results of certain industries, including banks. At the same time, grants were also a significant source of revenues, accounting for more than a third of the general fund revenues.
In March, the growth rate of expenditures continued to slow down (to about 14% yoy). At the beginning of the year, they were primarily used to finance the needs of defense and recovery, as well as social programs.
In addition, economic activity picked up in March, and business expectations improved in most sectors. For the first time in 11 months, positive business expectations exceeded negative ones. The energy situation was largely stable, with preparations for the spring sowing season and defense spending contributing to the industrial recovery in March. Warming weather and improved consumer sentiment supported the revival in construction and trade.
