The Federal budget in balance in April as spending moderated

RUSSIA ECONOMICS - In Brief 07 Jun 2023 by Evgeny Gavrilenkov

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The Ministry of Finance reported that in 5M23, the federal budget deficit was almost the same as in 4M23 (R3.4 trln), implying that in April, it was balanced (in fact, there was a tiny surplus). Spending moderated last month as the ministry spent slightly over R2.0 trln. Average monthly spending accounted for over R2.8 trln in 4M23. In 5M23, federal budgetary expenditures reached 45.5% of the annual target (a bit less than R29.1 trln). As in the rest of the year, the government needs to spend R15.8 trln (i.e., a bit less than R2.3 trln per month), average monthly spending will remain moderate for the rest of the year (unless the ministry amends budget). On the revenue side, the authorities collected only 37.6% of the annual target (R26.1 trln). Even though the risk that the government may lack revenues this year exists, there is a chance that in the rest of the year (especially in November-December), revenue flow will increase. So far, average monthly revenue accounted for a bit less than R2.0 trln. Revenue flow differs by month and is usually quite uneven. Therefore, some risk of insufficient revenues should not be overestimated. The targeted budget deficit is R2.9 trln. Even if this deficit appears wider, the government won’t have much difficulty financing it (note that in 5M23, it was higher, and the government managed to do so).