Page 61 - RusRPTOct21

6.1.1 Budget dynamics - results
The Russian government is on course to end the year with a RUB1 trillion surplus, or around 0.7% of GDP.
The government is preparing the 2022-24udget and an updated version of the budget for this year, without due toe sent to the Dumay the end of the month. In this edition, we have gathered the available information about changes in planned budget expenditures and NWF investments and updated our view on revenues.
Revenues soaring. The government should now receive $121bn of oil and gas revenues this year, instead of the initial projection of $83bn, while it should receive RUB14.7 trillion of non-oil and gas revenues instead of RUB12.8 trillion. The additional oil and gas revenues will be transferred to the NWF. The non-oil and gas revenues will be used to finance the government's additional spending.
Higher spending covered higher than expected non-oil and gas revenues. We estimate the additional spending this year at RUB0.9 trillion, while the additional non-oil and gas revenues should reach around RUB2.0 trillion. Thus the government will only deploy the extra funding generated by the economy (and not even all of them).
Budget to return to surplus this year. We are projecting a budget surplus at 0.7% of GDP this year. The government will also have RUB4 trillion in financial reserves, which are not included in the NWF. This will give the government flexibility over the forthcoming years to raise spending or reduce borrowing, if necessary.
MinFin's federaludget execution report for 8mo21 showed that
i) social support funds to be disbursed in September were already taken into account in the federaludget execution numbers for August;
ii) federal budget spending was, therefore, upy a massive +RUB0.7tn y/y (+47% y/y); and
iii) despite the pickup in expenditures, the surplus still stood at a strong RUB0.9tn YTD due to healthy revenue collection.
This suggests to us that the additional non-O&G proceeds for this year might exceed MinFin's August guidance of roughly RUB0.2-0.3tn, according to our calculations.
61 RUSSIA Country Report October 2021 www.intellinews.com