The 5M22 federal budget surplus widens

RUSSIA ECONOMICS - In Brief 14 Jun 2022 by Alexander Kudrin

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The Finance Ministry reported that in 5M22 the government collected in the federal budget 48.1% of the annually targeted revenues, i.e., R12.0 trln from R25.0 trln. Total revenues in May reached R2.0 trln, which is fewer than in the previous months as the ruble looked too strong and the ruble-denominated price of Urals was lower than in the early year. In May it fell to R5.1K while in January to April it varied from 5.5K to 9.2K. Still, the flow of oil-and-gas revenues was strong enough both in April and in 5M22 as in 5M22 the government collected 59.3% of the annually planned oil-and-gas-taxes. On top of that, the was a consistently strong flow of the non-oil-and-gas taxes. Spending moderated in April as the government spent less than R1.6 trln, and the federal budget surplus accounted for R454 bn in April alone and R1.5 trln in 5M22. As was mentioned previously in the reports of this series Russia’s fiscal situation looks solid and the 2022 budget will be amended – as revenues are heading well above the initially approved plan the expenditures will follow. Given the current trends, one has to expect a nearly balanced budget this year or even with some surplus even amid a strong increase in the spending plan, which currently stands at R23.7 trln. In 5M22 the federal budget expenditures accounted for R10.5 trln and the government can increase expenditures at least by R1.5 trln (and a greater increase is likely). Note, that effective from May the Ministry of Finance stopped publishing a detailed breakdown of revenues and expenditures of the budget. Just very aggregate budget execution numbers are now available. Evgeny Gavrilenkov Alexander Kudrin