Page 84 - RusRPTApr24

Minister Anton Siluanov’s statements that he expected to keep to the full year forecast of only 2% looked like a pipedream.
But he was right. Oil exports were rapidly reorientated from Europe to Asia. The tax system was remade to account for the sanctions, abandoning the Urals blend as a benchmark in the process. And by the summer the budget was back in profit. At the end of the year Russia reported 3.6% of growth and a deficit of 1.9% of GDP, slightly better than the original forecast.
Deficit 2M24
Where are we this year? The short answer is both better and worse.
MinFin has just released the budget data for January-February. the budget deficit first.
There was a deficit this January too, but at RUB308bn ($3.3bn) it was nowhere near as bad as last year’s. However, by the end of February that had grown dramatically to a cumulative deficit of RUB1.5 trillion, or 0.8% of GDP.
While 0.8% is less than half of last year’s deficit, that is almost at the full year forecast for this year of a RUB1.6 trillion deficit in 2024, according to the budget forecast. So in that sense 2024 is already off to a worse start than last year.
It raises the question: can MinFin really balance spending and revenues for all ten months left in the year? That will depend heavily on what happens to oil prices this year, how much the Kremlin spends on the war (a Russian spring offensive is expected), and whether the West can find more effective ways to sanction Russia’s income.
Central Bank of Russia monthly macro survey – budget balance in 2024
Revenues 2M24
The mild January deficit was helped in the first two months after oil and gas prices surged during that period. Oil is now above $85 per barrel after having spent months last year at around $65.
According to a preliminary estimate, oil and gas revenues were up by a solid 71.2% y/y in January-February at RUB1.6 trillion ($17.9 bn), plus a one-off mineral tax payment from the last quarter of last year, reports the MinFin. “Oil and gas revenues are also expected to remain steadily above their baseline level in the coming months,” the ministry added.
84 RUSSIA Country Report April 2024 www.intellinews.com