Page 63 - RusRPTMar21

6.0 Public Sector 6.1 Budget
Russia recorded a government budget deficit of RUB185.13bn in January of 2021 after running a deficit of RUB4,101 trillion deficit for all of 2020.
The federal budget deficit widened to 3.9% of GDP in 2020 vs. a surplus of 1.8% of GDP in 2019. COVID-19 mainly affected oil revenue, which fell 34% y/y in ruble terms, and increased expenditures by 4.7% of GDP.
The government plans to have a lower deficit of 2.5% of GDP (RUB2.7trillion) this year thanks to better oil prices ($45.3/bbl vs. $42.3/bbl in 2020) and a persistently weak ruble (RUB/$rate of 72.4 vs. 72.1 in 2020).
The just-unveiled parameters of the 2021-23 federal budget were generally in line with what was previously disclosed in the media.
Revenues are expected to climb to RUB18.8 trillion in 2021, up from RUB17.9 trillion in 2020, and then rise to RUB20.6 trillion in 2022 and RUBR22.3 trillion in 2023.
Expenditures will shrink to R21.5 trillion in 2021, down from R22.6 trillion in 2020. The higher spending this year was due to measures taken to combat the pandemic. Nominal expenditures are then slated to rise to R21.9 trillion in 2022 and to R23.7 trillion in 2023.
As a result of these plans, the budget deficit is expected to shrink to RUB2.8 trillion (2.4% of GDP) in 2021, versus RUB4.7 trillion (4.4% of GDP) in 2020. In 2022-23, the deficit is set to stabilize at RUB1.2-1.4 trillion (1.0-1.1% of GDP).
The main source of financing the deficit in 2020-23 will be borrowing, which will even exceed the budget deficit over all three years. Next year, net borrowing is expected to slide to R2.9 trillion, down from R4.4 trillion this year. In 2022-23, it will stabilize at R2.1-2.4 trillion, thus substantially exceeding the expected budget deficit.
The reason for this is that the government plans to start accumulating additional oil and gas revenues in the NWF to the tune of about R0.7 trillion in 2022 and R0.8 trillion in 2023.
The budget is based on a rather conservative oil price assumption and RUB/$rate ($45.3/bbl and 72.4, respectively), and the recent rally in oil prices has created significant tailwinds for the budget’s execution.
63 RUSSIA Country Report March 2021 www.intellinews.com