Federal budget execution numbers look decent

RUSSIA ECONOMICS - In Brief 08 Oct 2023 by Evgeny Gavrilenkov

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The Ministry of Finance reported that the federal budget was in deficit in 9M23, albeit the latter was narrower than in 8M23 (R1.7 trln versus R2.4 trln), implying that the budget was in surplus in September. It was the second month in a row of a federal budget surplus. Revenue collection improved in the case of both oil-and-gas taxes and non-oil-and-gas ones. So far, the share of oil-and-gas taxes accounted for about 28% of total revenues of the federal budget, i.e., the lowest level seen only in 2020, when the oil price was much lower than in 2023. In 2020, the Urals price averaged slightly below $42/bbl while the USD/RUB average annual exchange rate was close to the 72 mark - implying that the ruble price of the Urals blend was below RUB3000/bbl. This year, the ruble average price of Urals will likely stay over RU5500/bbl as the spread between Brent and Urals blends recently narrowed to about $14-16/bbl while the USD/RUB exchange rate stays slightly below 100. Even though oil-and-gas revenue flow increased in recent months, it looks as though the share of oil-and-gas revenues of the federal budget won’t exceed 29%, implying reduced dependence of the federal budget on the oil price. Note that in 2021 and 2022, oil-and-gas revenues accounted for 35.8% and 41.6% of the total revenues of the federal budget. So far, the federal budget remains officially unamended (with total revenue and expenditure targets slightly over R26.1 trln and slightly below R29.1 trln). In 9M23, the government financed 73.7% of annual planned expenditures and accumulated 75.5% of the planned revenues. The government collected 82.3% of the non-oil-and-gas over this period, i.e., well ahead of pla...