Page 25 - RusRPTOct23

2023 (RUB6.4 trillion, according to Bloomberg), and 2.3 times more than in the first war year of 2022 (RUB4.7 trillion).
RUB10.8 trillion rubles is approximately 6% of GDP, twice as much as the budget spent on defence items in the pre-war years. This ratio is comparable to US military spending in the 1980s, at the last peak of the Cold War (after 1988, the US never spent more than 6% of GDP on defence). Russia is still far from the USSR, which spent 12–14% of GDP on defence.
Almost nominal, but still, growth is planned for the “National Security” section, which takes into account spending on law enforcement agencies and intelligence services - from RUB3.2 to RUB3.5 trillion rubles.
Of the three remaining major sections of the budget, expenses for the National Economy - where government investments and subsidies to business are taken into account -- will be reduced from RUB4.1 to RUB3.9 trillion rubles.
The remaining healthcare and education will remain unchanged: RUB1.6 and RUB1.5 trillion rubles, respectively.
The government's willingness to dramatically increase military spending, without sacrificing anything else, is based on over-optimistic forecasts of budget revenues and expenditures.
The government expects that in 2024 the budget will receive RUB35 trillion in revenue, compared to RUB26.1 trillion planned for this year (an increase of RUB8.9 trillion rubles, or 34% compared to 2023). Of this, RUB11.5 trillion rubles should come from oil and gas revenues (RUB8 trillion is planned for 2023).
“The government’s expectation for revenues looks optimistic and unrealistic,” says Alexandra Prokopenko, a Russian finance expert.
Budget expenditures are planned at RUB36.6 trillion (an increase of RUB7.6 trillion, or 26.2% by 2023). This means that the budget deficit in 2024, according to the government’s plan, should be significantly reduced - from 2% of GDP planned for 2023 (RUB2.9 trillion rubles) to 0.8% of GDP (RUB1.6 trillion rubles).
These figures should be supported by the optimistic forecasts of the Ministry of Economy for 2024 included in the budget - GDP growth by 2.3% (and not less than 2% in 2025-2026), the price of Urals oil is $85 per barrel. The average dollar exchange rate in 2024, according to the forecast, will be RBU90.1 to the dollar. The current forecast of the Central Bank is somewhat more modest - for 2024 it promises 0.5–1.5% GDP growth and Urals at $60.
The bottom line is that the government, in order to finance the cosmic increase in military spending, while not forgetting about social ones, will have to find RUB9 trillion rubles of additional income somewhere in 2024 (an increase of 34%).
25 RUSSIA Country Report October 2023 www.intellinews.com