Russian Federal budget surplus is not as big as originally thought

RUSSIA / FSU POLITICS - In Brief 25 Sep 2019 by Alex Teddy
On September 20 Russia's draft federal budget for 2020-22 was approved. The budget surplus will be lower than was previously believed. GDP is forecast to grow to 1.7% in 2019 but only 0.2% in 2022.Government spending will be USD 305 billion in 2020. That is about 17.3% of GDP. Spending is set to rise by some estimates to USD 341 billion in 2022 which will be 16.9% of GDP.Revenue is due to drop from 2020 onward. Revenue is currently 18.5% of GDP in 2019 and by some estimates it will be 17.2% in 2022. This is due to a fall in oil prices and revenue reduction because of tax breaks for the oil and gas industry. These tax breaks will cost the state USD 25 billion in 2019 alone. These sweetheart deals for oil and gas are controversial because it is such a profitable sector anyway. The government's mantra on the economy is 'diversify'. It is the non-hydrocarbons sectors that need a tax break to grow.The budget surplus is a touchy subject. As economic growth slows to almost nil many people are exasperated to see the government hoarding money. Some call for deficit spending for economic stimulus and denounce retrenchment.

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