Page 100 - RusRPTApr23

In February, revenues began to pick up again as spending fell significantly, but the deficit continued to widen and now has already hit the target for the full year of RUB2.9 trillion, or 2% of GDP. Expenses in February were not as big as those as in January, and the March figures suggest that expenditures for the month should not exceed RUB2 trillion if nothing changes, reports The Bell.
Following the announcement of the January results economist changed their forecasts and said Russia was on course for at least a RUB3.3 trillion deficit, in the optimistic scenario, and more extreme versions predicted up to RUB6 trillion, or even RUB9 trillion if the January trends persisted, which is not widely expected to happen. The Bell reports that the consensus amongst economists is that the budget deficit will exceed the plan by 1.5-2 times by the end of the year, amounting to about RUB4.5 trillion.
Mishustin repeated earlier explanations that the deficit is due to the government advancing its spending, with a significant portion of costs being postponed to the beginning of the year. Mishustin says the budget deficit is expected to gradually align with budget parametres.
As of March 22, the budget deficit had increased even further to RUB3.8 trillion, according to the Electronic Budget portal, The Bell reports. However, it may not be accurate to extrapolate data for the whole of March based on three weeks of data, given that expenses and budget revenues are unevenly distributed within the month.
On a month on month basis the deficit was down RUB1,76 trillion in January, but that reduced to another fall of an addition RUB821bn in February. There was an additional fall of RUB319bn in the first ten-days of March, according to the latest results, and extrapolating that suggests the addition all this month will be RUB957bn for the full month, or slightly worse than the result in February. (chart)
It was already clear that the budget would face problems with filling, particularly in the face of restrictions on oil and gas exports and military spending. However, analysts are concerned that these problems could be more serious than expected. The January figures showed that budget revenues for the first month of 2023 fell by 25% y/y, while spending increased by 59%, but Chris Weafer, the founder and CEO of Macro Advisory and former head of research at multiple Moscow-based investment banks, argued in a bne IntelliNews podcast that the January results were a one off and the
true situation with the deficit will not be clear until about April.
There are several new moving parts driving the current deficit. Firstly is that the budget has traditionally used the Urals crude price as the benchmark for taxing oil companies. However, as bne IntelliNews has reported the Urals price is becoming increasingly meaningless as this is the price calculated for oil sent
100 RUSSIA Country Report Russia April 2023 www.intellinews.com