The federal budget still in surplus in 10M22

RUSSIA ECONOMICS - In Brief 11 Nov 2022 by Alexander Kudrin

---

The Ministry of Finance preliminary reports that the federal budget was in surplus in 10M22 as revenues exceeded R22.1 trln while expenditures were at R22.0 trln. As the ministry stopped publishing detailed fiscal accounts, including adjustments it makes regularly to initial estimates of the budget execution statistics (like the recent one for 10M22), one can conclude that in October alone the budget was not yet in deficit as revenues can be estimated at R2.400 trln while expenditures were at R2.326 trln. A very strong October revenue flow resulted from additional payment of the mineral resource tax by Gazprom (oil-and-gas revenues in October reached nearly R1.3 trln, which by a factor of two exceeded monthly volumes seen in the previous months).How much the Ministry of Finance will be able to spend this year remains a mystery as the final amended figure was not yet officially rubberstamped. In several recent publications of the working materials, the federal budget expenditures were initially amended to R27.0 trln, then the level was raised to around R28.5 trln and in another publication it moved to over R29.0 trln. It still remains a mystery whether the government will be able to allocate R7.0 trln in November-December. It could be that part of this spending could be secured in the budget projections, but actually allocated next year. Hence, the uncertainty about inflationary pressure from such spending, which is an additional argument in favor of the cautious CBR interest rate policy. So, far, the government expects the federal budget deficit to be around R1.3 trln this year. Evgeny Gavrilenkov Alexander Kudrin