Page 58 - RusRPTMar19

6.0 Public Sector 6.1 Budget
Russia’s VAT hike boosted Russia's budget revenues in January. The Finance Ministry on February 15 reported that budget revenues climbed 13.9% y/y in January to RUB1.5 trillion ($22.6bn).
The growth was mainly driven by non-oil and gas revenues, which surged 25% y/y; oil and gas revenues rose just 2.9% y/y.
VAT revenues, which accounted for 69% of all non-oil and gas revenues in January, jumped 21% y/y to RUB556bn following the increase in the VAT rate from 18% to 20% on January 1. Corporate tax receipts soared by 46% y/y, though these revenues represent only 6% of non-oil revenues and are very volatile.
Budget spending rose 8% y/y during the month to RUB1.2 trillion, in line with the government's plans to boost expenditures by 7.7% this year to RUB18 trillion.
The budget surplus reached RUB282bn ($4.2bn).
The government expects the full-year budget surplus to reach RUB1.9 trillion ($28.5bn), or 1.8% of GDP. This assumption is based on a Brent forecast of $65/bbl.
“Since we forecast an average oil price of $70/bbl this year, we project an even wider surplus of 2.7% of GDP,” Anton Stroutchenevski of Sberbank CIB said in a note.
2018 budget revenues were up 29% in 2018. Much of the gain came from higher revenues from oil & gas taxes, which saw a boom especially in autumn. The price of Urals-grade crude oil in early autumn hit 78−79 dollars a barrel, while weakening of the ruble’s exchange rate raised the ruble-denominated oil price to an all-time high. Revenues from oil & gas revenues accounted for 46% of all federal budget revenues in 2018, with the ratio of revenues from energy products to GDP rising to nearly 9%. During the 2011−2014 peak period, the ratio was only slightly higher (9.3%).
Growth in other budget revenues accelerated to over 14% last year mainly thanks to a 17% increase in value-added tax revenues. VAT revenues accounted for 58% revenues of other than oil & gas revenues. VAT’s share of other revenues has not been this high in roughly one and a half decade. Revenues from corporate profit taxes and dividends from state-owned enterprises also increased substantially.
Federal budget spending rose in nominal terms by just 2% in 2018. Defence spending declined slightly. Spending on domestic security saw large increases to the agencies responsible for security, prosecutorial and investigatory functions. The federal budget covers nearly all of these spending items.
The federal budget surplus rose in 2018 to a level equal to 2.7% of GDP. The
58 RUSSIA Country Report March 2019 www.intellinews.com