Page 78 - RusRPTFeb23

ministry wants to keep something in reserve.
Russia is planning to wrest more money from some commodity producers and state companies and trim non-defence spending, as the costs of the invasion of Ukraine mount. Proposals include higher dividends from state companies and a “one-time payment” by fertiliser and coal producers, under instructions issued to officials by Prime Minister Mikhail Mishustin in mid-December and seen by Bloomberg. The government order calls the effort part of “revenue mobilisation.” It also orders 175bn rubles ($2.4bn) in extra spending to resettle 100,000 people from Kherson to Russia, an apparent admission that the Kremlin has little hope of retaking the parts of the Ukrainian region that its forces abandoned in the fall just weeks after illegally annexing it. Russia’s budget is increasingly squeezed as President Vladimir Putin’s invasion heads for its second year and the economy contracts under sweeping US and European sanctions. Dividends and a windfall tax paid by Gazprom PJSC already helped swell a fiscal surplus late last year, before heavy spending commitments in December likely sent the budget into the red. Some of the additional money is necessary to cover costs related to the war, according to people with knowledge of the matter. No decision has yet been taken on the size of dividends or the one-time levy, they said, as the amount will depend on how the budget fared in the full 2022 year. Authorities will try to set dividends above 50% of net income for state companies whenever possible, they said.
6.1.4 Budget dynamics - regions
Even though the Russian federal budget ran a larger-than-expected deficit in 2022, regional budgets in aggregate are expected to have closed the year with a surplus (once they have made their own end-of-year payments), FPRI BMB Russia reports.
However, based on data from mid-December, most of this surplus was in Moscow and St. Petersburg, and, to a lesser extent, the regions of Kemerovo, Sakhalin, and the Yamal-Nenets Autonomous District. These are coal and hydrocarbon-producing regions which enjoyed bumper profits in the first half of the year.
Consider also that energy companies’ headquarters are located in the two capitals, hence, for instance, Gazprom’s extra profits contributed to St. Petersburg’s surplus.
At the same time, the number of regions running a deficit more than doubled from 19 to 39 (of a total of 83 regions plus occupied Crimea).
Previously, Russian Central Bank’s December report on the state of regional
78 RUSSIA Country Report February 2023 www.intellinews.com