Page 88 - Russia OUTLOOK 2024

Budget back in profit
The Russian budget went back into profit in August and is expecting deficits to fall in 2024 and 2025. Due to the smaller deficits, Russia needs to rely less on two key financing channels – NWF withdrawals and OFZ issuance. New issuance of domestic debt was RUB2.1 trillion in January-September 2023, significantly less than in the fourth quarter 2022. At the same time, the NWF only sold assets worth RUB560bn to support the budget (vs. RUB3 trillion in the fourth quarter 2022).
The federal budget deficit is projected to be at or below 1% of GDP in 2024-26 and to be financed by domestic borrowing. Planned net issuance is RUB3 trillion in 2023, followed by RUB1.6 trillion, RUB0.8 trillion and RUB1.5 trillion in 2024-26 respectively.
Still, to spread the load the Ministry of Finance is casting around for alternative sources of money. Russian business was subject to a windfall tax (estimated to be worth RUB305bn) in 2023. And there’s a good chance the authorities will impose some kind of regular levy in 2024. Therefore businesses have little incentive to show high turnovers. Indeed, business leaders have openly spoken of their willingness to pay higher taxes if this would result in a more predictable tax take.
But the big change is after budget revenues collapsed in December 2022 and January 2023 due to the massive remake of energy transport caused by the twin embargoes imposed in December 5 and February 5, Russian Finance Minister Anton Siluanov worked hard to remake the tax system to reflect the
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