The federal budget looks stable in 1H24

RUSSIA ECONOMICS - In Brief 09 Jul 2024 by Evgeny Gavrilenkov

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The Ministry of Finance reported that in 1H24, it collected R5.7 trln in oil-and-gas (O&G) revenues, and another R11.4 trln came from various non-O&G incomes, such as VAT. Meanwhile, VAT is the largest constituency of non-O&G revenues, and according to the 2024 annual plan, it should be about 54.1% of the total non-O&G revenues. In 1H12, this share reached 57.2%. It looks as though VAT flow will stay ahead of plan for the rest of the year, and total federal budget revenues will likely exceed the annual target, i.e, 35.1 trln. In 1H24, the government already collected 48.8% of the entire yearly plan. Note that, usually, tax collection rises close to the end of each year. Regarding O&G revenues, the government has already collected 51.9% of the annual amount. The current revenue trends indicate that actual revenue will be well above the target – not least due to higher-than-expected inflation. In 1H24, the federal government spent about R18.0 trln (48.5% of the annual plan), which means that, generally, spending didn’t lag. The federal budget deficit amounted to R0.9 trln in 1H24, and the budget was in surplus in June (and in May as well). In all cases, we refer to percentages of the amended budget numbers that look somewhat higher than the initial version. According to the initial version of the federal budget, its deficit in 2024 was supposed not to exceed R1.6 trln. The amended version assumes the R2.1 trln, as the government raised expenditures more than expected revenues. It looks likely that, eventually, the deficit will be closer to the initially assumed deficit as revenue trends look not too bad.