Page 76 - bne IntelliNews Russia OUTLOOK 2025

after a similar bond placement, which generated RUB957bn, as the Ministry of Finance (MinFin) rushes to shore up funding for the 2025 budget, BMB Russia reports.
The OFZs were then bought up by major Russian banks with a yield of over 19%. A week earlier, a placement was followed by a repo auction by the CBR, worth RUB850bn, to Russian banks, highlighting how the CBR is supporting the government’s debt sales by offering liquidity assistance to the financial sector.
The CBR has received growing criticism due to its high interest rate over the past months, as it also endangers investments, but its leaders have insisted that this is the only way to try to mitigate stubbornly high inflation.
In the second week of December, deputies of the nominally opposition Just Russia party went as far as to present a bill in the State Duma that would allow legislators to call on the president to dismiss the head of the Central Bank and make her responsible for fostering economic growth, among other things.
The Finance Ministry’s total bond placement plan for 2024 was RUB4.1 trillion. However, the CBR’s high key interest rate has interfered with these plans and called into question the planned borrowing of RUB3.5 trillion yearly in 2025-2027 as well.
In October, the federal government received the right to increase budget spending by RUB1.5 trillion in the fourth quarter of 2024 without amending the budget and without a comparable rise in fiscal incomes, which suggested that the government was going to have to find alternative financing for the ballooning cost of the war. The government expects the federal deficit to grow to RUB3.3 trillion by the end of December.
Even as the 2025 budget and major tax laws have been adopted, the federal government is also looking for further sources to shore up federal finances in 2025. According to the business news site RBC, the government will propose that 25% of road fines should, in the future, be transferred to the federal budget. So far, this income has only benefited regional budgets. In 2023, regions collected RUB120bn worth of fines altogether, but the Duma is discussing a steep increase in these fines for 2025. At the same time, the legislative assembly of the Transbaikal Territory has proposed raising the percentage of mineral extraction tax revenues that regions can keep; this would likely increase the income of a handful of regions by RUB20-24bn in total, but the government did not support it (and neither did it support previous attempts to shift the distribution of fiscal incomes towards regional budgets).
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