Page 81 - RusRPTAug22

6.1.1 Budget dynamics - results
Nominal revenues to the federal budget in June were up by a meagre 1.5% y/y. This translates to a very large drop in real terms as the 12-month rise in consumer prices and industrial producer prices averaged 14% in June. Federal budget spending rose sharply in June (+30% y/y)
In Russia, the development of government budget revenues further weakened in June.
In June, the nominal income of the federal budget was only one and a half percent more than a year earlier. The drop in income is really big in real terms, as the increase in consumer prices and industrial producer prices from a year ago was 14% on average in June.
Income from production taxes and export duties, which are mostly determined on the basis of dollar-denominated export prices in the oil and gas sectors, was just over 10% higher than a year ago. The world market price of Urals oil in May-June was indeed about 20% higher than a year ago, but the strong exchange rate of the ruble as well as the contraction of oil and gas production and exports have had a reducing effect on these tax revenues. The slippage of other revenues of the federal budget was 3% compared to the previous year in June, i.e. milder than in the previous months.
After the decline in May, the expenditures of the federal budget turned to a noticeable increase again in June. The budget was still in surplus in January-June, although the surplus of the last 12 months shrank to less than one percent of GDP in June.
The outlook for budget revenues at the end of the year is fragile. Non-oil and gas tax revenues (55% of federal budget revenues in January-September) are shrinking with the economic recession. The increase in oil and gas tax revenues from last year will be supported by the price of Urals oil, if it remains at the moderately high level of recent months (even though Urals is on sale). On the other hand, revenues are weighed down by the decrease in oil and gas production and exports and the ruble's exchange rate, which is significantly higher than last year.
On the basis of the weak development of budget revenues, the federal budget is estimated for e.g. in the Ministry of Finance, a deficit of a large percentage of GDP will be generated in these prospects, even if the increase in expenditures, including additional expenditures, would be well below the rate of inflation.
81 RUSSIA Country Report October 2020 www.intellinews.com