Page 71 - RusRPTApr21

6.0 Public Sector 6.1 Budget
The Russian government was running a budget deficit of RUB645bn in February, although the budget is expected to go back into surplus soon on the back of rising oil and commodity prices. Analysts estimate this year the government will end the year with a modest 0.5% budget surplus.
The Russian government discussed a proposal to cut borrowing this year by RUB0.5-1 trillion due fears of more US sanctions being imposed that could target sovereign debt, Bloomberg reported on March 3.
Russia hiked borrowing via the Russian Ministry of Finance ruble-denominated OFZ treasury bills programme from its regular circa RUB2 trillion a year to RUB5.2 trillion in 2020 to raise funds to fight the coronacrisis shock to the economy and plans to borrow RUB3.7 trillion this year, according to the 2020- 2023 budget.
However, faced with funding the first federal budget deficit in many years and several new spending initiatives, included a mooted RUB500bn social spending programme floated in the wake of January’s mass protests, the Ministry of Finance needs to raise more money and will turn to the OFZ market.
The total planned borrowing for this year was RUB3.7 trillion, but may now be cut to RUB3.2 trillion or even RUB2.7 trillion gross, according to reports.
According to The Bell, authorities are possibly concerned about implementing the borrowing program following a second round of US sanctions under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW) restrictions that could be imposed in June. The US Treasury Department (USTD) imposed sanctions on seven government officials in connection with the jailing of anti-corruption activist and opposition politician Alexei Navalny on March 2 that were considered to be light and largely symbolic. However, the Biden administration has made it clear the process has not ended with this round of sanctions and more are in the pipeline.
But with one fence cleared cleanly foreign investors poured back into the OFZ market this week, which saw its highest levels of buying in eight months.
Balancing the budget It is not clear if the government will need to borrow more following the rapid gains in the price of oil in the last two months that will almost certain produce surplus budget funds, beyond those envisaged in the budget.
71 RUSSIA Country Report April 2021 www.intellinews.com