Federal budget deficit narrowed in February as spending moderated tax collection improved

RUSSIA ECONOMICS - In Brief 06 Mar 2023 by Alexander Kudrin

---

Minfin reported that the federal budget deficit in February decreased to R821 bn (versus R1760 bn in January) as non-oil-and-gas tax collection improved and reached R1286 bn (versus 931 bn in January). The oil-and-gas tax flow was poor in both months as the price for Russian oil remained below $50/bbl, while the ruble remained relatively strong, albeit having weakened in February. Last month, the government collected R521bn of the oil-and-gas taxes, while in January, the figure was lower (R426 bn). In January, the government spent R3115 bn rubles, while in February, spending moderated to R2627 bn. If one assumes that the government won’t amend the budget this year and limit its spending by the approved R29.1 trln, then in the remaining months of the year, the government will need to spend a bit more than R2.3 trln per month. The non-oil-and-gas revenues may exceed the target of R17.2 trln and climb closer to R18.0 tlrn, while the oil-and-gas taxes will lag behind the plan. The government targeted over R8.9 trln, while most likely, it will be able to collect between R6.0 trln and R6.7 trln of the oil-and-gas taxes. If so, then the budget deficit may well exceed the R2.9 trln target and be above R5.0 trln. Evgeny Gavrilenkov Alexander Kudrin