Page 73 - RusRPTJul21

6.1.1 Budget dynamics - results
MinFin's federal budget execution report for 5mo21 shows that i) expenditures have remained elevated compared with the seasonal pattern, and ii) revenues have been even higher YTD, as the federal budget surplus for 5mo21 was RUB0.3 trillion on the back of Russia's roaring recovery of economic activity and the brisk restoration of oil & gas revenues.
From the monetary policy perspective, we believe that the fiscal story does seem to support a disinflation effort. i) it is our view that spending will decelerate into 2H21, as outlays revert back from seasonally high rates to more typical patterns. ii) Federal budget expenditures tend to fall short of MinFin's appropriations for the full year: for instance, in 2020, actual spending was RUB1tn below MinFin's allocations (the most recent allocations for 2021 equal RUB22.7tn, whereas the budget law suggests RUB21.5tn of spending).
Even if we assume that the full RUB22.7 trillion of appropriations is spent, YTD expenditures still look elevated by seasonal standards: most recently, however, they switched from social support programmes and healthcare toward national economic issues, as the latter tripled y/y in May.
Our calculations suggest that the federal budget surplus for FY21 could be as high as RUB0.2-0.7 trillion , or 0.2-0.6% GDP (whereas the current budget law implies a RUB2.8 trillion, or a 2.4% GDP deficit for 2021).
6.1.2 Budget dynamics - specific issues...
Successful tax collection and administrative reforms keep rolling — from July 1, the minimum level of income, assets, and tax obligations required for businesses to be hooked up to the Federal Tax Service’s (FNS) electronic monitoring system will be slashed by 2/3rds. That’s 3 billion rubles ($41.41 million) to 1 billion rubles ($13.8 million) for income/assets and 300 million
73 RUSSIA Country Report July 2021 www.intellinews.com