Page 66 - RusRPTJun20

In January–March, non-oil revenues to the federal budget were up by 13% y/y. They rose so steeply in April that their growth in January–April exceeded 30% y/y. The jump in April came from a huge leap (about 1% of GDP) in a category that includes revenues from the central bank (CBR). The CBR apparently handed over virtually all of the payments planned for this year from the operating surplus that is derived from the sale of its majority ownership stake in Sberbank to the government.
The funds for the purchase were taken from the National Welfare Fund, the state's reserve fund. By linking the purchase of Sberbank shares to these payments from the CBR’s surplus, National Welfare Fund assets were converted into budget revenues that the government will use to finance budget spending.
Without the one-time transfer from the CBR, non-oil & gas tax revenues in January-April were largely unchanged from a year earlier. VAT revenues this year are so far on par with oil & gas tax revenues. Anyhow, VAT revenues fell by 15% y/y in April and were about the same in the four months of this year as in January-April 2019.
When the CBR payment is included, total federal budget revenues in the first four months of this year were up 10% y/y. When it is excluded, January–April revenues were down by 7–8%. Budget expenditures in the first four months of this year were up by a bold 24% y/y. The large increase in spending reduced the budget surplus for the previous 12 months to just over 1% of GDP in April. Without the revenues from the Sberbank arrangement, the 12-month budget balance was only slightly in surplus.
Finance minister Anton Siluanov says the ministry expects this year’s federal budget revenues to shrink by a fifth from 2019 and this year’s original revenue estimate if the price of Urals oil averages $30 a barrel and GDP declines by 5%. The loss in budget revenues amounts to roughly 4% of GDP. Siluanov expects additional federal spending to be authorised this year and the federal budget deficit to come in at around 4% of GDP.
The federal budget expenditures will be increased by about 1% of GDP, originally planned, or possibly even two​, although budget revenues will decrease, according to the Minister of Finance Anton Siluanov.
At the same time, reallocation of expenditure will continue. More funds from the federal budget have been allocated to the economy, especially to the SME sector. SMEs operating in sectors affected by the coronavirus (COVID-19) may be provided with funds for salaries and other running costs if they e.g. commit to maintaining employment at 90% of the March level. There are more than 70 industries on the list of affected sectors.
More funds will come to social support, as some families with children will become a new form of support and those who become unemployed and registered after the beginning of March will receive the maximum amount of unemployment benefit.
Additional funding will also be provided for health care and corona control, e.g. in the form of special wage supplements. Instead, some investment projects and government wage reform are being postponed. Several so-called Funding for Putin's national projects is being shifted, mainly to the unstarted parts of the projects.
Other sectors of public finances – the state social funds and regional budgets – receive more transfers from the federation to make up for lost revenue. Regional budget deficits are relaxed. Payments of the regions' debts to the federation will be postponed until 2021–2029, and interregional lending will be allowed.
66​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com