Federal budget surplus narrows as revenues climb

RUSSIA ECONOMICS - In Brief 09 Nov 2023 by Evgeny Gavrilenkov

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The Ministry of Finance reported that the federal budget surplus narrowed to R1.235 trln in 10M23. The original officially approved 2023 budget targeted a deficit of R2.925 trln. The deficit was widest in 4M23 (R3.049 trln) as the government spent money ahead of schedule in the early year to finance some expenditures it considered a top priority. The government spent R24.341 in 10M23, compared to the initial target of R29.056 trln. It may appear that the final 2023 spending figure will eventually be higher as the government has plenty of cash coming in. The initial federal budget revenue target was R26.130 trln. In 10M23, it turned out that the government already collected R23.106 trln, i.e., over R2.3 trln monthly. In October alone, revenues reached R3.373 trln, and the budget was in surplus for the third month in a row. Oil-and-gas tax collection improved markedly in recent months as the spread between Brent and Urals narrowed (to less than $10/bbl). Minfin reported that in October, Urals price fell to $81.52/bbl from $83.08/bbl, which was still not bad as the ruble remained close to USD/RUB 100. As a result, the ruble-denominated Urals price was still close to RUB8000/bbl and secured a strong flow of oil-and-gas tax revenues last month. While lagging behind the annual plan, these revenues were able to catch up. In 10M23, the government collected R7.210 trln of oil-and-gas revenues, which is not far from the initial annual target (R8.939 trln). It looks as though in November and December, oil-and-gas revenue collection will be more moderate as the oil price (both Brent and Urals look lower) while the ruble appreciated due to some government actions, such as an imposi...