The government to amend the 2022 budget and start drafting the budget for 2023 and beyond

RUSSIA ECONOMICS - In Brief 20 Jun 2022 by Alexander Kudrin

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The Russian media reported that the government started reconsidering the budget plan for 2022 and drafting the federal budget for the years beyond. The final figures may be slightly different from what is being discussed now but generally, the medium-term budgetary outlook is reasonable, albeit quite conservative, especially for the years beyond 2022. The numbers under discussion are reportedly based on the previous version of the macroeconomic forecast, which assume a deeper GDP contraction than the current thinking of the Economics Ministry. The latter is likely to accomplish its thinking by the end of this month and produce an updated macroeconomic outlook so that. A key conclusion from the current version of the budgetary planning is that the federal budget is planned with a deficit of 1.2%, 1.1%, 0.9%, and 0.8% of GDP in 2022-2025, which can be easily financed from domestic sources. Moreover, this deficit can be smaller as the now expected 2022 revenues of R25.529 may be higher, as in 5M22 and in May alone the federal budget revenues exceeded R12.0 trln and R2.0 trln. Despite a too strong ruble, the flow of oil-and-gas taxes was stable - even though well below April’s number. In 2023, the government plans to collect R24.779 bn and in 2024-25 the figure is expected to be only marginally higher. The quoted revenue numbers do not take into account that some companies may get a sort of tax holiday in 2Q22 and 3Q22, but they have to repay the respective amounts in 2023. It is yet unclear what will be the exact amount of deferred tax payments and whether businesses will be keen to use this opportunity. In any case, currently, it looks as though the government expects on...