Page 46 - RusRPTJuly18

AKRA.
6.1.2 Budget dynamics - govt funding plans
Russian government plans no major privatisation deals in 2018-2020,
Tass reported on June 5 citing a report by the Audit Chamber. Earlier this year Minister of Economic Development Maxim Oreshkin reiterated that privatisation is not a priority given the healthy state of the budget , especially given the positive fiscal outlook on growing oil prices. In 2017 the federal budget outperformed and posted a surplus of RUB1.34 trillion or 1.4% of GDP. Should oil prices remain at current levels, the budget surplus is expected at 2% of GDP in 2018. The Audit Chamber's report estimates that as of May 1 2017, the amount of federal revenues from privatisation deals stood at RUB3.45 trillion.
Russia's Finance Ministry threw its support behind privatising certain state companies to channel the proceeds for financing the six-year spending drive under Vladimir Putin's May Decrees , Vedomosti daily and Tass reported citing the ministry representatives. The announcement comes after the government seemingly gave up on large-scale privatisation plans and instead opted for consolidation of domestic resources through sometimes unpopular measures, such as hiking the VAT rate and increasing the retirement age . The scheme would create more funds to be invested in Putin’s spending programme. Currently any revenues generated from oil prices over $40 can only be used to cover a budget deficit or must be paid into the National Welfare reserve fund. However, the government is free to spend privatisation revenues as it sees fit and without restriction.
Russia’s new RUB3.5 trillion ($55bn) infrastructure fund that will be launched in 2019 will attract RUB7 trillion ($110bn) of co-financing by 2024 , the head of Russian Direct Investment Fund (RDIF) Kirill Dmitriev told President Vladimir Putin on June 20. The fund is intended to be a major source of financing Putin's six-year spending spree, the details of which he outlined in his new updated May Decree s. The fund will be supplemented by money generatedfroma V AThike ,theunpopular retirementageincrease ,and tax reform in the oil and gas sector . Dmitriev estimated that total investment enabled by the fund will help boost GDP by 2% annually. The fund will be drawn from extra borrowing, mostly through the domestic OFZ federal bonds.
RUSSIA Country Report July 2018 www.intellinews.com