Page 64 - RusRPTDec22

First, since July, budget revenues are on the downward trend showing a 4-26% y/y contraction, hence, strong 9M22 figure is explained by double-digit growth in the first 4M22.
Second, in October, budget revenues remained under pressure – slight growth in oil & gas revenues was mainly explained by increased tax on Gazprom (Rb416bn), while non-oil & gas revenues plummeted more than 20% y/y – hence, showing an acceleration in decline.
Third, Russia’s budget positions are becoming more dependent on oil-and-gas revenues – their share was above 60% in the last three months.
Forbes Ukraine estimates that Russia has spent $28bn – or a quarter of its annual budget – on its war in Ukraine, which has lasted nine months so far. This estimate includes the direct costs that are necessary to support military operations. But it does not include stable defence spending, or losses related to the economy. In 2021, all budget revenues of Russia amounted to $340bn. That is, the Russian Federation has already spent a quarter of last year’s revenues on military operations.
If in the spring such costs could look quite acceptable, considering that the Russian Federation received about $1bn a day for oil and gas. Now the situation is different. The revenues of the federal budget of the Russian Federation from the export of oil and gas are decreasing – Russia has already lost most of the European gas market after the Nord Stream supply was cut off. Sanctions on Russian oil will begin in December.
In October, revenues continued their downward spiral as the war in Ukraine weighs on the government, with a circa 4% y/y decline: while it is in line with September’s trend, the breakdown of revenues implies that the main support came from a special one off tax payment by Gazprom (RUB416bn), but non-oil-and-gas revenues plummeted more than 20% y/y, reports BSC GM.
The federal budget expenditures were reported at RUB2.3tn in October, implying a circa 27% y/y growth.
“Despite this increase in expenditures, exceeding its average monthly dynamics, an artificial improvement in tax revenues enabled to offset this growth and resulted in slight surplus of circa RUB74bn vs RUB83bn deficit in September,” BCS GM said in a note.
Non-oil-and-gas revenue execution is at risk. While October expenditure execution was at 93% of the full year target and oil revenue execution exceeded its budget plan, non-oil-and-gas revenue accounted for only 80% of
64 RUSSIA Country Report December 2022 www.intellinews.com