The Russian budget posted a surplus in 1Q21

RUSSIA ECONOMICS - In Brief 12 Apr 2021 by Alexander Kudrin

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The Finance Ministry reported that revenue collection soared in March so that in 1Q21 the government was able to collect 28.2% of total revenues targeted for 2021 as a whole. In 1Q21 the government collected 27.0% of annually planned oil-and-gas revenues and 28.8% of the non-oil-and-gas revenues. Oil-and-gas revenues accounted for 30.5% of total revenues. Expenditures were financed more or less in line with the plan, i.e., without traditional delays often seen previously in the early months of each year. In 1Q21 the government allocated 23.7% of planned expenditures (not accounting for partially unallocated funds left from 2020). As a result, the budget turned into a surplus, which reached R741 bn in March and R205 bn in 1Q21.Russia’s fiscal performance in 1Q21 looked better than expected – largely, due to a strong revenue flow from the non-oil-and-gas segments of the economy. Accelerated inflation helped to collect more taxes, such as VAT and excises, but the ongoing economic recovery also helped. As tax collection became extremely uneven by months in recent years, it is hard to come up with a convincing updated fiscal outlook at a glance, i.e., without proper sensitivity analysis. However, it won’t be surprising if, in 2021, the currently planned budget (i.e., excluding the aforementioned funds left from 2020 and likely forthcoming amendments) may be balanced. Within a couple of days, GKEM Analytica will come up with a more detailed outlook of Russia’s fiscal performance in 2021.Evgeny GavrilenkovAlexander Kudrin