Page 51 - RusRPTDec19

RUB bn
2019 (current law)
2020F
2021F
2022F
Total
-1881.2
-880.8
-614.5
-287.6
% GDP
1.7
0.8
0.5
0.2
including:
Debt
1409.7
1599.5
1718.5
1874.5
NWF
4.7
4.5
4.3
4.1
Other
-3295.7
-2484.9
-2337.4
-2166.1
Source: MinFin, VTB Capital Research.
The Duma approved the new federal budget for 2020-2022 in the third, final reading no November 21​. The new budget law does not contain any significant changes from the original draft that was submitted by the Cabinet in late September.
Despite expected economic expansion, the government’s revenue and expenditure as a % of GDP are projected to fall: from 18.1% for revenue and 17.3% for spending in 2020 down to, respectively, 17.2% and 16.9% in 2022.
The government’s fiscal balance will remain in the black: the surplus will stand at 0.8% of GDP in 2020 and 0.2% in 2022.
The stringent approach to spending – via continued implementation of the ‘fiscal rule’ – will remain unchanged, allowing the sovereign fund, the NWF, to expand from $167bn in late 2020 to $242bn by YE22.
National projects still one of the top spending items in the new budget. National projects will account for 9.8% of gross federal expenditures in 2020, 10.8% in 2021 and 12.2% in 2022. Moreover, next year, the actual amount of funding in this area could top 14.7%, or RUB3 trillion, if the government puts to work all unspent money on these projects carried from 2019.
However, additional public funding on the economy from the sovereign fund will remain limited: the Duma approved the government’s proposal to spend no more than RUB585bn a year in the next 3 years via the Development Fund – an investment vehicle that will source its funding from the NWF’s surplus.
Fiscal planning is set to remain conservative. The new budget is based on a conservative macro scenario for crude oil prices (an average of $55-57/bbl) and the currency rate (RUB65-66/$).
At the same time, the projected economic growth dynamic is rather bullish: estimated GDP growth is seen at 1.7% y/y in 2020 and 3.1-3.2% in 2021-2022. However, the overall approach to fiscal planning is still ultraconservative – besides the continued budget surpluses and increased volume of the sovereign fund, the government plans for only a small rise in gross public debt from 15.3% of GDP in 2020 to 16.5% in 2022.
The Russian government could undershoot its annual spending plans by more than RUB1 trillion ($15.6bn),​ a state watchdog warned on November 10 – the biggest short fall in nine years.
51​ RUSSIA Country Report​ December 2019 ​ ​www.intellinews.com