The budget deficit remains moderate

RUSSIA ECONOMICS - In Brief 08 Aug 2023 by Evgeny Gavrilenkov

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Minfin reported that in 7M23, the federal budget deficit reached R2.8 trln. It was slightly up from R2.6 trln in 1H23. In 4M23 and 5M23, the budget deficit was higher (over R3.0 trln) as this year, the government allocated budgetary expenditures spending in a rather unusual fashion, having spent significant amounts earlier in the year. As is known, spending usually exceeds average monthly levels in November and especially December. So far, the government has signalled no major amendments to the budget. If so, then in the rest of the year, the average monthly spending should be more or less the same and in the preceding months. In 7M23, the government allocated nearly 60% of the annual spending target (close to R29.1 trln). One cannot rule out that spending plans may evolve for the rest of the year, but an increase won't be as significant as in previous years. The overall revenue flow looks relatively stable and has even improved in July. The government collected 55.6% of the official annual plan (R26.1 trln). Tax collection usually goes up at the end of the year, and it is likely to be the same this year as well – not least due to improved collection of the oil-and-gas taxes. In July, the government collected over R0.8 trillion of these taxes, while in the previous couple of months the figure was R0.5-0.6 trln. The ministry of Finance also reported that the average Urals price reached $64.37/bbl, which was well above levels seen in the previous months (in 7M23, average Urals price climbed to $53.94/bbl as Brent price averaged $80.07/bbl according to Minfin). It looks likely that the spread between Brent and Urals won't widen in the rest of the year, and oil-and gas tax...