Page 68 - bneIntelliNews monthly country report Russia May 2024

imports compared to 5% for exports), even when adjusted for difficulties in calculation (you can read more about this here). The increased current account balance was also linked to shallower deficits in the primary and secondary accounts as dividends payable to non-residents decreased and there was a fall in the value of personal transfers abroad.
Both of the main components of Russia’s budget — energy and non-energy revenues — are up impressively so far this year. Oil and gas revenues in the first quarter were 79% higher than the same period last year at 2.9 trillion rubles ($32 billion). Non-oil and gas revenues came in at 3.3 trillion rubles ($35 billion), up 24%. The total budget deficit for the three-month period was 607 billion rubles ($6.5 billion), equivalent to 0.3% of Russia’s GDP. That is comfortably within the government’s plans for 2024, which envisages an overall budget deficit of 0.9% of GDP.
The increase in oil and gas revenues is linked to three main factors:
● High oil prices. Since January, benchmark Brent crude oil has
traded above $80 per barrel, with the price clearing $90 in April. The United States is replenishing its reserves, boosting demand at the same time OPEC+ production cuts limit supply. The conflict in the Middle East as well as the spate of Houthi attacks on ships in the Red Sea are also pushing up prices.
● New tax calculations. Russia’s oil taxes no longer depend on export volumes, which allows the government to rake in higher revenues even as it abides by OPEC+ agreements. Back in 2023, the finance ministry changed the way it calculates the Mineral Extraction Tax (MET), the main resource tax. It is now based on the higher of i) Brent prices minus a set discount ($20 a barrel since Jan 1), or ii) the price of Urals at Russian ports plus the shipping tariff to Europe. The shipping tariff is currently set at $2 a barrel, but there are plans to introduce a specialised calculation for this. In simple terms, the ministry does not care how much oil is actually being exported since the tax is now levied “at the well.” Last year the formula was different, hence the bumper growth in revenues this time around. Russia's energy revenues were also hit hard at the start of 2023 in the first months of the West’s oil price cap.
● Windfall taxes. Oil companies paid more in quarterly additional income tax and one-off MET payments increased to compensate the government for unsuccessful subsidies paid out to oil companies. Those payments were valued at 190 billion rubles ($2 billion).
68 RUSSIA Country Report May 2024 www.intellinews.com