Page 76 - RusRPTJun21

they have also led to the Ministry of Finance considering a reduction of its borrowing plan via proceeds carried over from 2020.
There are four takeaways from MinFin’s flash report for 4M20 says Alexander Isakov, chief economist at VTB Capital said in a note
First, healthy nonoil revenue growth supports all other indicators that economic activity is rapidly recovering – the tax base is expanding and at a rapid clip – even after accounting for the catchup collection of last year’s taxes.
Second, the budget balance is bound to prove narrower than the current budget law implies (RUB2.8 trillion, or 2.4% GDP), a RUB205bn federal budget surplus for 4M21 suggests to us that the full year deficit will likely print in the RUB0.51.1 trillion range, with probability mass skewed toward RUB0.5 trillion.
Third, the upside in nonoil and gas revenues likely leaves space for a further spending boost later into the year – even after accounting for the RUB270bn of additional spending items announced during President Vladimir Putin's address to the Federal Assembly.
Our estimates find external validation in MinFin’s own estimated RUB500bn of nonoil revenue upside for 2021.
Fourth, even accounting for the potential upward spending adjustment, we believe spending will decelerate into 2H21 as outlays on social spending and healthcare revert back from seasonally high rates to more typical patterns.
From the monetary policy perspective, we believe that the fiscal story does seem to support a disinflation effort, with one particular area of discussion centred on the evaluation and extension of the subsidised mortgage programme.
Federal budget RUB bn
Sept 20
Oct 20
Nov 20
Dec 20
Jan 21
Feb 21
Mar 21
Apr 21
budget law 21
budget law %GDP
Federal budget balance
88
40
706
1,696
56
480
741
82
2,755
2.4%
Revenues
1,528
1,929
1,383
2,194
1,504
1,252
2,544
2,186
18,765
16.2%
Oil & gas
447
475
454
453
491
545
583
893
5,987
5.2%
Nonoil & gas
1,081
1,454
929
1,741
1,003
706
1,961
1,293
12,778
11.1%
Expenditure s
1,617
1,969
2,089
3,890
1,560
1,732
1,802
2,268
21,520
18.6%
Source: MinFIn
Federal budget change y/y
76 RUSSIA Country Report June 2021 www.intellinews.com