The federal budget remains in decent shape in 2M24

RUSSIA ECONOMICS - In Brief 14 Mar 2024 by Evgeny Gavrilenkov

---

The Ministry of Finance reported that in 2M24, the federal budget accumulated over R5 trln in revenues over R1.6 trln coming as oil-and-gas taxes and about R3.4 trln as the non-O&G ones). These amounts accounted for 14.3% of the annual plan in the case of total revenues and 14.1% and 14.5% in the case of O&G and non-O&G revenues. The result looks not too bad as at the start of the year, revenue collection is traditionally low. It catches up with annual targets later. In 2M24, the federal budget expenditures accounted for about R6.5 trln (17.7% of the annual plan) and were allocated ahead of schedule. Traditionally, spending lagged in earlier months of the year, but the situation changed in 2023 when the government started financing certain expenditures early in large amounts. Therefore, the current situation is not new and to some extent repeats the 2023 spending practices. Despite accelerated spending, the federal budget deficit was moderate. In 2M24 it was below R1.5 trln. As revenue collection looked decent, one may assume that the economy was also not in too bad a shape, implying that the revenue flow will increase in the rest of the year – especially because the taxpayers pay some taxes quarterly. Even in the case if the total revenues won’t be able to catch up with the annual target (slightly below R35.1 trln) the government won’t face much difficulty in raising the hypothetically “missing” funds by borrowing locally.