Page 24 - RusRPTApr23

The deficit was attributed to reduced oil and gas revenues and increased spending. January had a RUB1.76 trillion deficit, a record since 1998, while February saw a deficit of RUB0.8 trillion.
Budget revenues decreased by 25% year-on-year to RUB3.2 trillions, with oil and gas revenues dropping by 46%.
The two-month spending increased by 52% to RUB5.7 trillions. The budget is already at 88% of the deficit of RUB2.9 trillion planned for the whole year or 2% of GDP, which is less than the 2.3% deficit or RUB3.3 trillion in 2022. The size of the current deficit has led to concerns about how the state will cover the budget shortfall this year.
VTB Capital analysts on the "Solid Numbers" telegram channel predicts a total deficit of 3% of GDP by the end of the year of at least RUB5 trillions.
Ministry of Finance (MinFin) planned 2% GDP deficit for 2023 has been called an overly optimistic forecast, with a senior economist at the Institute for Emerging Economies of the Bank of Finland suggesting the deficit could reach 4-5% of GDP.
The reduction in the deficit for February, after a record deficit in January, is attributed to a sharp drop in government spending after the extremely large spending in the first month of the year.
In general, expenses for the first two months amounted to 9% of the annual plan, and this is close to the seasonal norm (7%), according to Alexander Isakov, head of Russia and CIS macroeconomics at Bloomberg.
But in order to meet the planned RUB29.1 trillion of spending in the remaining ten months it will be necessary to spend an average of RUB415bn less than last year, and such a reduction in spending is unlikely, analysts say.
“The spending plan has already grown by RUB0.5 trillions, according to current data, and will grow by another RUB0.5 trillion due to last year’s “leading expenses” in December,” writes Solid Numbers.
On this basis, VTB Capital predicts a total deficit of 3% of GDP at the end of the year.
Isakov's calculations in February gave a projected deficit of RUB6.9 trillions by the end of the year, or about 4.5% of GDP.
The reduction in oil and gas revenues is attributed to a decline in Urals oil prices and a reduction in gas exports. According to the International Energy Agency (IEA), Russia's revenues from oil and gas exports fell by almost 40% in January. At the same time, production and exports are at their highest levels since the beginning of the war. According to the IEA, as well as the Finnish Institute for Emerging Economies, this indicates the effectiveness of oil sanctions.
24 RUSSIA Country Report Russia April 2023 www.intellinews.com