Page 68 - RusRPTJun20

In April federal budget was closed with a surplus of 0.2% of GDP. The Finance Ministry reported on 15 May. Despite the economic crash the government has been extraordinarily cautious in spending its money. While many other countries have committed themselves to spending anything between 5% and 20% of GDP in stimulus programmes, so far the Kremlin has committed itself to 1.9% of GDP.
Revised figures now put the budget surplus at 0.5% in 1Q20 and at 0.4% in 4M20. Estimates based on Minfin data show a 49% increase in budget expenditures in April vs 1Q20 in seasonally-adjusted terms, but this was almost fully compensated by a 46% rise in revenue. While revenue from O&G have dropped by 26% m/m, non-oil revenues posted a major increase of 89%.
A budget deficit will appear in May. The surplus state of the budget is a temporary phenomenon and can largely be explained by the initial response of the federal government to the crisis. Last month, Russian authorities tried to protect their finances by shifting the burden of anti-crisis spending to business and local governments. This approach has started to change in May as federal aid to the population, business and the regions finally started to grow. As a result, analysts expect that in May the federal budget will be closed with a deficit. The latter, however, is likely to be covered by issuance of a new public debt (OFZs) rather than by withdrawals from NWF.
6.1.2 ​Budget dynamics - specific issues...
Russia’s government has allocated over RUB81.1bn ($1.1bn) for aid to small and medium-sized enterprises (SMEs) ​in the sectors affected by the coronavirus pandemic, according to a respective decree released on the cabinet’s website. “To allocate to Russia’s treasury from the reserve fund of the government of the Russian Federation in 2020 budgetary provisions amounting to RUB81.18bn for providing in 2020 subsidies from the federal budget to small and medium-sized enterprises operating in sectors of the Russian economy that have been most affected by the deteriorating situation due to the novel coronavirus infection spread,” the document signed by Acting Prime Minister Andrei Belousov said. The provided subsidy stipulates that enterprises should maintain at least 90% of employees from the number in March 2020, according to the decree. Over 970,000 enterprises may apply for support.
Economy minister Maxim Reshetnikov believes comparisons between Russia’s government anti-crisis spending and that of other nations are unfair​, according to reports on May 27. Russian President Vladimir Putin announced​ ​the third aid package​ on May 12 that added significantly more spending on the social sphere and support for small and medium-sized enterprises (SMEs). Russia’s three anti-crisis packages cumulatively cost RUB3 trillion($42bn), or roughly 2.6% GDP, according to the minister. Critics say that Russia’s support is very modest compared to countries spending upwards of 10-20% GDP to bail out their populations and businesses. However, Reshetnikov believes a more accurate metric of Russia’s stimulus is its budget deficit. While other countries have offer direct subsidies to businesses and cash payments to the people, much of Russia’s aid is in the form of tax deferrals, loans and guarantees that will still impact the budget even if they are not direct transfers of cash. Last year, Russia’s federal budget
68​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com