Privatization of the state-owned objects will have a limited impact on the state budget revenues in 2016-2017

Over 7 months 2016, revenues generated from the privatization of the state-owned objects amounted to UAH 58.8 mln. accounting for 4.6% of the target indicator for the specified period.

In view of the announced sale of several large state-owned objects, revenues from the privatization may significantly increase in the current year, though they are unlikely to be sufficient to cover the budget deficit (UAH 85.2 bln. – the adjusted target indicator for 2016). As before, the government plans to finance the latter by direct debts and capital market instruments.

In the opinion of the Rating Agency «ІВІ-Rating», because of the low investment attractiveness of Ukraine's economy and the overall cheapening of assets in the real sector (both in hryvnia and in US dollar equivalent), non-tax revenues (including revenues from the privatization) are unlikely to be received in the target amount, and their impact on the budget liquidity will be limited. Moreover, the agency does not exclude an increase in the budget burden because of a possible issue of debt obligations (off-the target) within possible additional capitalization / recapitalization of certain banks, as well as financial aid to the governmental institutions (Pension Fund of Ukraine, Deposit Guarantee Fund) in 2016-2017.

In the draft budget of Ukraine for 2017, revenues to be generated from the privatization of the state-owned objects are envisaged in the amount of UAH 17.1 bln. (derived budget expenditures in the amount of UAH 20 mln.) given the total budget revenues in the amount of UAH 876.9 bln. The total budget revenues for 7 months of 2016 amounted to UAH 301.3 bln. or 49.4% of the target indicator for 2016; the budget deficit for the specified period amounted to UAH 49.94 bln.