State budget in Jan-12; next natural gas talks in sight; banks\' liquidity rises through NBU loan issue

Economics: State budget in Jan-12: In surplus, privatisation proceeds solid
The Ministry of Finance released the monthly data on its state budget execution in Jan-12, which showed that it collected revenues of US$21.7bn, with expenses totaling UAH20.1bn, and the resulting balance in the black, at UAH1.5bn. In consolidated terms, the state budget surplus amounted to UAH2.1bn. On a 12-month rolling basis, the state budget deficit narrowed to UAH21.2bn, or 1.6% of GDP, down from UAH23.6bn (or 1.8% of GDP) in December 2011, and down from as much as UAH63.6bn (5.7% of GDP) a year ago, in January 2011. The MoF did not disclose the monthly debt service volume. However, if we assume that it rose to a monthly volume of UAH1.2bn, then we would arrive at a primary surplus (based on 12-month rolling data) of UAH2.3bn, or +0.2% of GDP. A month ago, the central government budget balance was in the red by a mere 0.03% of GDP (see Chart 2). Also, on a positive note, the pace of growth in revenues (based on 12-month rolling data) was at 30% YoY, by far exceeding the growth rate of expenditures: overall (including debt-servicing payments) and primary payments (excluding debt-servicing payments), see Chart 1. The positive side of the Jan-12 budget data was the privatisation proceeds, which amounted to UAH2.4bn (US$0.3bn) in just one month. This one-month data shows that authorities are placing their hope in privatisation as one of key tools for financing the budget deficit. One clue to this is that, never before in the Ukraine\'s history of privatising state-owned assets has the government been so eager to sell the assets so early in the year. Indeed, January\'s amount is far below the previous full-year\'s proceeds of UAH11.5bn (US$1.4bn), which was mainly due to the privatisation of fixed-line telecommunications giant Ukrtelecom. Nevertheless, this year\'s pipeline of assets to be privatised includes electricity distribution companies and a thermal power generation company, Dniproenergo.

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