Decent fiscal performance in 2m21

RUSSIA ECONOMICS - In Brief 11 Mar 2021 by Alexander Kudrin

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The Ministry of Finance reported that in February total federal budget revenues reached R1.25 trln ow which R0.545 trln came in as the oil-and-gas prices. Even though the Urals oil price in February 2021 was higher than in February 2020 ($60.78/bbl versus $54.24/bbl), oil-and-gas revenues in February 2021 were somewhat 10% lower y-o-y as Russia still keeps its OPEC+ production cuts agreed in 2020.The non-oil-and-gas revenues rose by nearly 8% y-o-y in February. Such a good result relative to the pre-pandemic era stems not from accelerated inflation alone, but also from an ongoing recovery of the economic activity, particularly of the retail sales (as was mentioned by GKEM Analytica yesterday). As February is a short month in terms of working days and normally some important taxes are paid quarterly, a large proportion of non-oil-and-gas taxes last month was associated with taxes on imports (around 46%). Next month more budgetary income will originate from taxation of the domestic economic activity.Federal budget expenditures in February increased compared to January so that in 2M21, the government allocated 15.8% of the annual expenditures. Hence the government spending looks quite even so far. Note, that actual spending this year may exceed the formally approved budgetary expenditures, as in 2020 the government was unable to allocate around R0.8 trln of the amended budget, and this money could be spent in 2021.In 2m21, the budget was in deficit of nearly R0.6 trln which doesn’t look worrying as in the early year tax collection is low, and it will catch up during the year. Overall, if the oil price stays around current levels till the year-end then the federal budget r...