Steady fiscal performance in November

RUSSIA ECONOMICS - In Brief 14 Dec 2020 by Alexander Kudrin

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The Russian federal budget posted a deficit of R0.815trln in November and R2.512 in 11M20. In November, federal budget spending increased to R2.298 trln (versus R1.969 trln in October) and reached nearly R19.040 trln in 11M20. Note that the amended 2020 federal budget assumes expenditures at 22.561 trln, implying that in December, the government is due to allocate over R3.5 trln. It may be uneasy and potentially unwise to do so as inflationary pressure can only increase in such a situation amid already accelerated inflation. GKEM Analytica’s baseline scenario assumes that the government won't spend the targeted amount. Unallocated 2020 expenditures could reach the system in 2021.On the revenue side, the situation looked reasonably stable as the oil-and-gas revenues exceeded R450bn last month and were only slightly below October level. In 2020 the government will be able to collect around R5.3 trln of the oil-and-gas taxes, given that R4.8 trln were collected in 11M20. Oil-and-gas taxes will be 33% below the 2019 level, but revenues from the non-oil-and-gas part of the economy will not fall that much. In November, the non-oil-and-gas revenues were up by 21% y-o-y, which may indicate that the economy was doing relatively well last month. It looks as though revenue collection is catching up with the amended 2020 revenue plan as the 11M20 tally exceeded R11.7 trln while the amended plan assumes R12.7 trln revenues from the non-oil-and-gas part of the economy. Note that these numbers include CBR profit from the sale of Sberbank to the government transferred to the federal budget, as the latter financed this purchase from the reserve fund. Overall, fiscal performance in Nove...