Smooth federal budget performance in 1Q24

RUSSIA ECONOMICS - In Brief 09 Apr 2024 by Evgeny Gavrilenkov

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Minfin reported that the 1Q24 federal budget revenues accounted for about R8.7 trln (24.9% of the annual plan set at nearly R35.1 trln). The figure looks decent, as in 2024, the revenue target exceeds last year’s actual revenue figure by 20.4%. In 1Q24, the government collected R2.9 trln of the oil-and-gas (O&G) taxes, and R5.8 trln came as the non-O&G proceeds (in both cases, quarterly revenues accounted for about 25% of annual targets). In March alone, the federal budget revenues accounted for R3.7 trln, which is higher than the average monthly figure in the first two months of the year as some taxes are quarterly. Meanwhile, as in January and February, tax collection is usually below the average annual figure (not least because of a holiday season and a smaller number of working days in January, and to some extent, in February), revenues will likely grow in the coming months. The federal budget expenditures reached R9.3 trln in 1Q24, i.e., 25.4% of the annual target. As a result, the federal budget deficit accounted for R0.6% trln (the annual target is R1.6 trln). If revenues keep growing, then one cannot rule out the amendments in the 2024 budget – it will be clearer in the mid-year. Relatively good non-O&G tax collection suggests the economy is alive and keeps growing. Rising oil prices supported the O&G revenue flow. The Ministry of Finance stopped publishing statistics on the Urals price, while the Investing.com portal data show that the Urals price was about $76/bbl in March, and the spread between Brent and Urals narrowed. The portal’s statistics also show that the spread further narrowed in April, and the Urals price kept climbing to $85/bbl. Therefore, one c...