Page 13 - RusRPTOct22

If inflation is taken into account, then in real terms, the failure of non-resource budget revenues reaches 30%, and “this is a disaster,” says Evgeny Suvorov, an economist at Centrocredit Bank. The government has the NWF in reserve, but in conditions when the currency is frozen by sanctions, spending from it is just a money issue, he says: the Ministry of Finance transfers the currency to the account of the Central Bank, and the latter “converts” it into “printed” rubles.
Despite the difficulties with the budget, the government is unlikely to make significant spending cuts, Orlova doubts: “Overcoming the recession requires financing support measures, and the March 2024 electoral cycle dictates its own terms.” Probably, by urging departments to tighten their belts, the Ministry of Finance "forms a reserve to cover other expenses," she suggests.
2.3 Russian gas exports to EU countries nearly ended
Gazprom closed the Nord Stream gas pipeline running on the bottom of the Baltic Sea on September 2. According to Gazprom, the reason is technical, according to Kremlin press secretary Dmitry Peskov, the reason is the economic sanctions of Western countries. The closure was not a surprise, as the pipe has been used at low capacity all summer, the Bank of Finland institute for Emerging Economies (BOFIT) reports in its weekly update.
Gazprom has reduced its gas exports to EU countries for about a year. Starting from the spring of last year, Gazprom filled its European gas storages exceptionally slowly.
In October 2021, Gazprom stopped selling gas on the spot market, which contributed to increasing gas market prices in Europe. In April 2022, Russia stopped deliveries along the Yamal-Europe gas pipeline passing through Poland, and in May deliveries through Ukraine via the Sohkranivka station stopped due to hostilities.
Now that the Baltic Sea pipeline is also closed, only small amounts of natural gas from Russia will come to the EU countries via Ukraine and Turkey. According to Gazprom's press release, exports to EU countries have shrunk to half of the 2021 level in January-July.
EU countries have succeeded in replacing Russian pipeline gas with other imports. According to Eurostat, in January-June, EU countries' gas imports were only 3% lower than a year earlier.
The contraction of Western exports is reflected in Russian gas production. In the first half of the year, natural gas production decreased by 5%, but in July it was already 24% y/y.
The collapse of exports is especially reflected in Gazprom's production. Compared to the previous year, the company's gas production decreased by more than 30% in June, July and August. Such a drastic reduction in production suggests that Russia's own gas reserves are completely full. If
13 RUSSIA Country Report October 2022 www.intellinews.com