Page 54 - RusRPTAug20

6.0​ Public Sector 6.1​ Budget
Key parameters: draft federal budget for 2020-22
Units
2018
2019 (current law)
2020F
2021F
2022F
Revenues
RUB bn
19,454.40
20,174.90
20,363.00
21,246.50
22,058.30
Revenues
% GDP
18.7
18.5
18
17.7
17.2
Expenditure
RUB bn
16,713.00
18,293.70
19 ,82.1
20,632.00
21,770.70
Expenditure
% GDP
16.1
16.8
17.3
17.1
16.9
Balance
RUB bn
2741.4
1,881.20
880.8
614.5
287.6
Balance
% GDP
2.6
1.7
0.8
0.5
0.2
Source: MinFin, VTB Capital Research.
Federal budget: surplus allocation and debt financing
RUB bn
2019 (current law)
2020F
2021F
2022F
Total
-1881.2
-880.8
-614.5
-287.6
% GDP
1.7
0.8
0.5
0.2
including:
Debt
1409.7
1599.5
1718.5
1874.5
NWF
4.7
4.5
4.3
4.1
Other
-3295.7
-2484.9
-2337.4
-2166.1
Source: MinFin, VTB Capital Research.
Budget good, reserves solid, but stagnation stays. ​On 16 July, President Putin held a meeting on drafting the new 2021-23 federal budget. Putin announced that the main principle should be responsible budget policy, based on the ‘budget rule’ and inflation targeting.
These words confirm the continuance of the previous economic course, focused on maintaining stability – in the economy, society, reserves – even at a price of no growth and stagnation. Weak growth rates and falling investment were a reality for Russia long before the pandemic. According to Rosstat data, over the past 5 years (2014-19), GDP grew on average by 0.8% y/y, while investments rose by only 0.3% y/y. Over the same period, real disposable income fell on average by 1.1% y/y every year. However, this did not stop the international reserves from expanding and rather significantly in dollar terms over these past 5 years (by 44%).
Russia’s FinMin has officially proposed to cut spending from 2021​. It would slash expenditures by 1 tn Rub (~1% GDP) in ‘21 through “optimization”,
54​ RUSSIA Country Report​ August 2020 ​ ​www.intellinews.com