Page 71 - RusRPTFeb23

6.0 Public Sector 6.1 Budget
Russia’s downward slides in the economy and imports since its delusional invasion of Ukraine eleven months ago have substantially depressed Russia’s government revenues.
The consolidated budget, which comprises federal, regional and local municipal budgets plus state social fund budgets, has seen nominal revenues decline significantly on-year since mid-summer 2022 (consolidated budget information is only available through October 2022).
The same applies to federal budget revenues, which account for over half of consolidated budget revenues. In the final months of last year, the federal budget got a boost from a huge production tax imposed on state-owned Gazprom. As a result, nominal federal budget revenues briefly exceeded 2021 levels. Without the Gazprom windfall, revenues would have continued to slide.
In terms of real purchasing power, revenues to both the consolidated and federal budgets headed downward since late last spring, when spiking inflation outpaced the nominal rise in revenues (measured broadly as an even split between the change in consumer prices and industrial producer prices for domestic supplies as spending on government wages and social supports constitute about half of consolidated budget spending).
While inflation slowed significantly in the second half of 2022, consolidated budget revenues were still down in real terms by 10−15 % y-o-y in autumn and federal budget revenues were off by 15−20 %. Indeed, without the Gazprom money, the downward (albeit less severe) trend would have continued in the fourth quarter. Earlier Russian recessions have caused similar real declines in government revenues.
Russian Prime Minister Mikhail Mishustin prepared in December a military “revenue mobilisation” to the budget, which would result in an increase in dividends from state-owned companies (to more than 50% of net profit, where possible) and lump-sum payments from coal and fertiliser producers.
The size of neither has yet been precisely determined - this will depend on the final budget results for 2022.
RUB175bn ($2.5bn) rubles are allocated for the resettlement program for 100,000 refugees from Kherson and the region. RUB150bn rubles should be
71 RUSSIA Country Report February 2023 www.intellinews.com