Page 49 - bne IntelliNews Russia Country report May 2017

year and initiated a coordinated implementation of the transitionary fiscal rule.
On the fiscal policy front, this year will see a discussion of the fiscal rule , which should culminate in the new law. Alexey Kudrin recently shared his vision on which oil price level is more appropriate as a cut off ($45/bbl vs. the current $40/bbl).
Another matter is the revision of the budget law to accommodate differences between forecasts and execution; that is likely to be initiated later this year, probably in July.
VTB estimates that the full year federal budget deficit is likely to print close to 2.0%, if the ‘transitional’ fiscal rule’s freeze on financing additional spending with oil and gas windfall revenues is adhered to.
6.1.1 Budget dynamics - specific issues...
The Finance Ministry has submitted amendments to the 2017 budget to parliament, reiterating its RUB16.6 trillion expenditure target for this year in the budget draft. However, given that federal budget expenditure is showing 8% y/y growth for the past 12 months, as of April, or 3% y/y for 4M17, the plan submitted implies tighter spending in 2H17, which looks very ambitious considering the upcoming presidential election.
Extrapolating the current budget execution guides for RUB16.9 tn in expenditures for this year, a figure which the Finance Ministry highlights as a possible option in its draft presented to parliament, according to RBC sources
One obvious confirmation, suggesting that the risk of additional spending is real is the recent comment from President Putin that some 5.8mn public sectors employees are not subject to the May 2012 presidential decree
49 RUSSIA Country Report May 2017 www.intellinews.com