Page 48 - RUSRptApr17

6.0 Public Sector 6.1 Budget
Russia’s federal budget was executed in January-March 2017 with a deficit of RUB274bn , according to preliminary Finance Ministry data and in line with market expectations. This figure is higher than the deficit of RUB81bn (according to revised data) seen in 2M17.
The expanded budget deficit is not seen as a sign that the budget position has deteriorated , but rather seen it as the result of a seasonal increase in expenditures to RUB1.5 trillion in March, up from RUB1.1 trillion in February.
The spending dynamic still looks restrained : after a 77% y/y spike in January, expenditures decreased by 9% in February and 8% y/y in March. Furthermore, the detailed structure of expenditures indicates 36% y/y acceleration in spending to support the national economy in 1Q17. This sends a positive signal for industrial production and investments over the coming months.
The revenue dynamic was positive in both the oil and gas and non-oil and gas components . Non-O&G revenues for March totaled RUB503bn, which most likely corresponds to the MinFin’s preliminary expectations and means that the scope of interventions will remain at a level close to RUB70bn over the next few months.
Separately, the consistently strong 11% y/y growth in non-oil and gas revenues in 1Q17 means there is a high likelihood that the MinFin exceeded
48 RUSSIA Country Report April 2017 www.intellinews.com