Page 103 - RusRPTMar23

Finance minister Anton Siluanov is adamant that the annual defict for 2023 will not exceed 2% of GDP despite the spike in the gap between expenditures and revenues. That means raising revenues with export sectors under pressure.
In January the budget revenues collapsed, but at the same time budget spending increased more than one and half times. Officials said that the spending was war related and due to prepayments made for investments for the coming year. They said that they wanted to smooth out expenditures that are normally made in December at the end of the year that negatively affect the full year spending.
The size of the deficit means that Russia’s deficit for the full year in 2023 is likely to significantly increase. The CBR estimated in its latest macroeconomic forecast that the economy will slow this year with a 1-4% contraction, while MinFin estimates the deficit for the full year would come in at around 3% of GDP or RUB2.9 trillion. However, experts say the January result means the full year deficit could more than double to RUB6-8 trillion.
The revenues of the Russian federal budget in January 2022 amounted to RUB1.356 trillion, which is 35% lower than in January 2022, according to MinFin. Spending was more than twice as much at RUB3.117 trillion, 59% higher than January 2022. Thus, the monthly budget deficit amounted to RUB1.76 trillion.
The biggest fall in revenues was from oil and gas which was down by half (48%) compared to the same month a year earlier. Non-oil and gas revenues also fell by more than a quarter (28%), reports Bloomberg.
The mushrooming of the discount on Russia’s Urals blend of oil vs the benchmark Brent has seen the cost of Urals fall to $49.48 per barrel recently which is 41% cheaper than Brent. Russian Urals blend oil in January traded with an almost $30 per barrel discount in January at $49.5 versus $77.8 per barrel average Brent blend price.
MinFin said changes to payments in 2022 accounts for much of the change, including the accelerated procedure for VAT refunds introduced in April 2022; the peak in the reimbursement volume falls on the first month of the quarter accounting for the jump in expenditures.
Two officials told The Bell that another big change in tax accounting was the transition to a single tax account (UNS) that came into force on January 1, 2023.
Bloomberg Economics economist for Russia Alexander Isakov said the collapse in the oil and gas revenues in January was predictable, and a result of the oil sanctions that came into force in December and February, but that revenues were likely to recover in the latter part of the year as the market responded to changes in oil export routes forced on Russia.
103 RUSSIA Country Report March 2023 www.intellinews.com