The Russian budget posted a small deficit in January as expenditures were up y-o-y

RUSSIA ECONOMICS - In Brief 10 Feb 2021 by Alexander Kudrin

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Federal budget revenues dropped by 3.7% y-o-y in January amid 3.3% y-o-y growth of expenditures. Oil-and-gas revenues were down by 19.7%, while non-oil-and-gas revenues were up by 6.7% y-o-y. In January, the government collected 8.0% and spent 7.8% of the annual plan. The result looks good as usually tax collection in January is low. The oil-and-gas revenues will jump up y-o-y in 2Q21 amid a low base effect. The non-oil-and-gas revenues will continue to climb and exceed the annual target. Fiscal performance in January was in line with GKEM Analytica’s expectations. A smaller budget deficit this year (compared to the officially planned R2.7 trln) looks increasingly likely. Note that between R0.8 trln and R0.9 trln can, in principle, be additionally spent this year as the government was unable to spend this money in 2020 (even though it was able to pre-finance the bulk of this amount by domestic borrowing). It is yet to be seen how much it will be willing and able to spend in 2021 in reality. Overall, the government has more than enough spare cash to finance all expenditures it planned.Decent revenue collection from the non-oil-and-gas share of the economy indicates that economic activity continues to recover. Hence, in the coming months, revenue collection will be high as well.Evgeny GavrilenkovAlexander Kudrin