Page 67 - RusRPTDec21

Russia's recent history,” BOFIT said.
Revenue growth in the third quarter continued to be driven by oil and gas tax revenues, which have risen by almost half from two years ago. However, other budget revenues have accumulated considerably more throughout this year than in 2019. In January-September, the increase from two years ago was more than 20%, or 7-8% in real terms. Revenues from VAT have continued to grow rapidly, reaching almost 30% more in January-September than two years earlier. Revenues from income taxes and wage-based social taxes have continued to grow quite well (up 15-20% in January-September from two years ago).
Revenues from corporate profit taxes rebounded sharply in the third quarter, pushing them up in January-September to nearly 25% from two years ago. In addition, taxation of certain metals and mineral fertilizers is being increased, which, according to a bill in the Duma, is based mainly on increased or reformed production taxes based on sales prices. In this way, taxation reduces profits for companies, which key authorities believe are excessive in times of high prices.
Expenditure on social assistance in the consolidated budget rose sharply in the third quarter of the year, due in part to the lump sums announced by President Putin during the Duma election, e.g. for retirees.
Growth in several other key expenditure items slowed. In January-September, expenditure on various sectors of the economy increased by more than 20% year-on-year (and half from two years ago) and expenditure on social benefits by 9% (more than 25% year-on-year) and also by education by 10% (17%).
Expenditure on health care, defence, and internal security and law enforcement in January-September was about a year earlier, although since 2019, health care expenditure has risen by more than 30%.
The Russian federal budget expanded the surplus to RUB2.1 trillion ($29bn) in 10M21, adding RUB0.5 trillion in October alone, beating the consensus expectations of a RUB1.8 trillion surplus for the reporting period, according to the latest report by the Finance Ministry.
As followed by bne IntelliNews, Russia’s federal budget is looking in far better shape than anyone had predicted.
"The October surplus was the result of continuing growth in budget revenues, which were up 30% year on year, and virtually flat expenditures," Sberbank CIB commented. The growth in budget revenues was driven by higher oil and gas revenues (up 133% y/y thanks to higher oil and gas prices, as well as an increase in production and a slightly weaker ruble), while non-oil revenues declined by 3.8% y/y.
VTB Capital (VTBC) commented on November 16 that FinMin's report indicated a negative fiscal impulse for two consecutive months (in real y/y terms). This, coupled with the easing credit impulse, is one of the factors starting to weigh on consumer demand.
67 RUSSIA Country Report December 2021 www.intellinews.com