Page 71 - RusRPTJun21

The consolidated budget, which covers the budgets of the federation, regions and municipalities, and state social funds, generated 9% more revenue in nominal terms in the first quarter of this year than a year earlier, well above the inflation rate. After falling last spring and summer, annual revenue growth was already 7% in the fourth quarter, Bank of Finland Institute for Economies in Transition (BOFIT) reports.
However, revenues from special taxes on oil and gas, ie production taxes and export duties, were still a tenth lower than a year ago in the first quarter. This was due to significantly lower than usual crude oil production and especially exports due to weaker-than-usual external demand and the OPEC + production limitation agreement. The export price of crude oil was also a few percent lower than a year ago. It follows with a delay the world market price, which was already well above the price a year ago.
Other budget revenues have grown well. In the first quarter, their increase from the previous year was 13%, which is almost as fast as in the last quarter of last year. However, in line with the slow economic recovery, most key tax revenues, such as revenues from social taxes on wages, income taxes and corporate taxes, increased by only a few percent in the first quarter, ie inflation.
The rise in the first quarter has special features. Revenues from VAT increased by a quarter, which may in part reflect a further improvement in tax collection.
In addition, budget revenues were boosted quite a lot by the balance paid by the central bank to the budget from the surplus it received last year from the sale of Sberbank to the state.
The increase in consolidated budget expenditure has slowed down from the strong wave of recovery in the first half of last year, but expenditure continued to grow quite rapidly in the first quarter of this year. Growth was 9% year-on-year, only slightly slower than in the second half of last year.
Expenditure on sectors of the economy in particular, but also on the housing sector, rose again to over 30%. Although growth in non-pension social assistance expenditure condensed closer to last year's peak of 40%, it rose to more than 20% higher than a year earlier.
The slowdown was more pronounced in health care, where annual growth in expenditure was just over 10%, up from 30% last year. Expenditure on education, internal security and law enforcement increased at the same fairly moderate pace of 5-7% as last year.
The increase in budget expenditure in the first quarter of this year does not reflect the shift towards last autumn's fiscal stance, where expenditure growth is projected to cool to a couple of percent this year to reduce the budget deficit.
Budget revenues and oil prices have risen significantly from policy expectations, which will help reduce the deficit and could lead to faster expenditure growth than projected in the policies this year.
71 RUSSIA Country Report June 2021 www.intellinews.com