An unexpected plus was found in the sharp fall of the ruble

The collapse of the Russian currency could have a beneficial effect on the state of the federal treasury

In June, the federal budget deficit decreased by 816 billion rubles, and in the same month the ruble depreciated against the dollar by about 10%, entering the top of the world’s weakest currencies anti-rating in terms of exchange rate dynamics. Is there some kind of veiled relationship between these two events, the first of which cannot but please the Ministry of Finance, and the second cannot but sadden citizens whose salaries are measured exclusively in domestic banknotes? The question also arises in connection with the recent call of the head of the Central Bank, Elvira Nabiullina, not to build “conspiracy theories” about what is happening with the ruble.

So, according to the Ministry of Finance, in the first half of 2023, the budget deficit was at the level of 2.6 trillion rubles. According to Siluanov’s department, the dynamics of spending reflects a slowdown in the rate of spending after a surge in January-February, due to intensive advances in government orders, including defense ones. At the same time, non-resource revenues increased by 17.8% year-on-year to 9 trillion rubles in the first half of the year.

The bad, but absolutely predictable news is related to the decline in oil and gas revenues in January-June by 47%, to 3.38 trillion rubles. The Ministry of Finance explains this by the high comparison base of last year (when Russian raw materials went with a bang to any country and at crazy prices), a decrease in Urals brand quotations, as well as a drop in natural gas exports. In this part, due to shortfall in revenue, the agency continues to sell foreign currency (yuan) from its reserves. As for the ratio of income and expenses in general, the first for six months amounted to 12.38 trillion rubles (minus 12% in annual terms), the second – 14.98 trillion (plus 19%).

What is the nature of the June reduction of the budget deficit? It is known that in June the budget received 286 billion rubles from the National Welfare Fund. The fact is that since 2016, income from the management of the funds of the NWF goes to the treasury and is accounted for as its income. But this is only part of the overall picture. And if we assume that the weak ruble contributed to the situation? After all, it is obvious that a cheaper and at the same time bulky ruble mass greatly simplifies the task of filling the budget.

“Expenses in June were the lowest since the beginning of the year, while non-oil and gas revenues rose. Hence the serious monthly increase,” explains Nikita Maslennikov, a leading expert at the Center for Political Technologies. – We should also not forget about the purely technical, accounting side of the issue: in January-February there were large-scale advance payments, and part of the June (formally) expenses fell at the beginning of the year. Ultimately, there was a redistribution of financial resources in favor of the first summer month. However, there is another circumstance that none of the officials is talking about. Take a look at the dynamics of the dollar in the period from June 6 to July 7: a month ago, the “American” cost 81.4 rubles, and last Friday – 91.25 rubles. That is, the Russian currency has weakened by almost 10% over the month. At the same time, Maslennikov continues, if at the beginning of June the ruble equivalent of a barrel was slightly above the level of 6,000 rubles, then a month later it cost already 7,150 rubles (with the cost of Brent at just over $78). Accordingly, a certain relationship between the weakening of the ruble this summer and the reduction of the budget deficit can be traced. At the same time, the FNB feels great: in June, the volume of the “main Russian money-box” decreased by only 63 billion rubles, from 12.35 trillion to 12.29 trillion rubles, of which the Ministry of Finance estimates the liquid part at 6.44 trillion. In the light of all this, Elvira Nabiullina’s remark about the “conspiracy theory”, which was made last week, does not look accidental. Well, yes, there was no conspiracy, the stars just aligned!”

At the same time, Maslennikov concludes, one should not blame the leaders of the Central Bank and the Ministry of Finance for drowning the ruble artificially, in the interests of the budget. Nabiullina is right: there is inertia in the current weakening of the Russian currency, which was laid back in December 2022, when export earnings began to fall. As a result, since January 2023, the current account has decreased by 5.4 times.

Published in the newspaper “Moskovsky Komsomolets” No. 29066 dated July 10, 2023

Newspaper headline:
Weak ruble is the savior of the budget