Page 70 - RusRPTMar21

Revenues were weighed down by a one-third drop in oil and gas tax revenues. Other revenues increased slightly even without the Sber operation. Budget expenditure was increased by about 14% in the fight against the viral and economic crisis, much more in real terms, as low inflation (about 3.5% for the whole year) ate up relatively little of the purchasing power of revenue,” BOFIT reports.
The deep and highly successful tax reforms of recent years paid dividends as the government continues see strong revenue collection. In particular, the Ministry of Finance has successfully diversified its tax base and is not as heavily dependent on oil and gas export duties for its income, although these both still play an important role, accounting for between a quarter and a half of the state’s income, depending on prices.
The revenue-to-GDP ratio was around 36%, of which one percentage point came from “Operation Sber.” The support and stimulus measures raised expenditure as a share of GDP to almost 40%, the peaks of the previous recession years of 2009 and 1998.
The consolidated budget deficit turned from a sizeable surplus to a deficit of just over 4% of GDP. The deficit was mainly financed by borrowing from domestic banks through the issue of Russian Ministry of Finance ruble-denominated OFZ treasury bills, which doubled to about RUB4 trillion.
That drove the government’s debt up from historically low levels, but Russia still has the lowest level of debt of any major market in the world. At the end of the year, the general government debt was about 18% of GDP and the government had liquid assets of about 8% of GDP ($184bn) in the NWF, which acts as a reserve fund.
“In the last months of 2020, the budgetary situation began to level off. Revenues in the consolidated budget were even several percent higher than a year ago. Non-oil tax revenues in the fourth quarter were well over a tenth higher than a year earlier, which is partly due to the end of some tax deferrals. Oil and gas tax revenues declined less in previous quarters (although the contraction was still more than a quarter year-on-year). Expenditure recovery slowed slightly from the peak of the summer, but expenditure still exceeded the level a year ago by a tenth,” BOFIT reports.
Non-oil tax revenues accumulated in the budget last year were mainly reduced by falling corporate income tax revenues.
Other items such as income from income taxes, social taxes on wages and salaries, and excise and VAT taxes either increased or remained fairly unchanged.
Expenditure increased in all government functions, largely due to support and
70 RUSSIA Country Report March 2021 www.intellinews.com