At the end of two thirds of the year, a budget deficit of 1.5% of GDP was recorded

In August, the federal budget closed with a surplus—as a result, the accumulated deficit over eight months was reduced to 1.5% of GDP. Rising oil prices and the weakening of the ruble ensure a recovery in oil and gas revenues, and the revival of business activity translates into a rapid increase in VAT collections. This gives the government confidence that the annual deficit of just 2% of GDP, which seemed unattainable at the beginning of the year, will be achieved. The successful execution of current revenues gives the authorities more freedom when designing the budget for the next three years – on Friday, Prime Minister Mikhail Mishustin held a meeting on the project, which should be submitted to the State Duma by October 1.

The federal budget deficit for the eight months of 2023 amounted to 1.5% of GDP (2.36 trillion rubles) – after 1.8% in July and with a plan for the year of 2%, reported on Friday the Ministry of Finance. With revenues of 16.99 trillion, expenses in January-August amounted to 19.35 trillion rubles.

Head of Government Mikhail Mishustin, at a recent meeting to prepare the next budget, noted that separately in August there was a surplus of 230 billion rubles. Let us remind you that the Ministry of Finance does not provide monthly results, but they can be determined by comparing two consecutive periods (however, since the figures are clarified in retrospect, this may give an inaccurate result: for example, from the department’s tables a different August surplus follows – in the amount of 456 billion rubles). .

The Prime Minister noted the August “significant increase” in non-oil and gas revenues – up to 1.82 trillion rubles, which is 56.5% more than last year. From the data of the Ministry of Finance it follows that the main contribution to this growth is made by the main Russian tax in terms of collections – VAT. Its receipts for eight months (domestic and “import” taxes together) due to the growth of business activity, trade turnover and, partly, prices amounted to 7.28 trillion rubles. This is a plus of 24.2% year on year. Non-oil and gas revenues in general grew at exactly the same rate. Collections of the federal portion of income tax this year are not impressive and actually do not participate in the overall growth – 1.17 trillion rubles, plus 0.7% compared to the comparable period.

Oil and gas revenues, which dropped significantly compared to last year, are gradually recovering (For more details, see “Kommersant” dated September 6). This is helped by the rise in oil prices (in July the price of Urals rose to $64 from June $55 per barrel – taxes, we recall, are paid from the macro parameters of the previous month) and the weakening of the ruble.

In July, according to the Central Bank, the average exchange rate was 90.4 rubles/$ compared to 83.2 rubles/$ in June.

As a result, based on the results of eight months, the depth of the decline in oil and gas revenues (receipts amounted to 4.84 trillion rubles) in annual terms amounted to 38%. At the end of the half-year, the figure was higher, 47% – the gap from last year’s schedule is gradually decreasing.

Budget expenditures for eight months are 19.35 trillion rubles, which is a plus of 12% compared to the same period last year. Their abnormally high growth rates, which the Ministry of Finance explained by generous advances and advanced government procurement at the beginning of the year, continue to slow down – according to the results of the first quarter, expenses were higher than last year by 34%, for the first half of the year – by 19.5%. Now the department notes the preservation of the “normal level” of spending dynamics, reporting that since the beginning of the second quarter of the year, in year-on-year terms, they have grown by only 1.1%.

Judging by Friday’s meeting, the White House is quite pleased with the interim results of the implementation of the main financial plan of the Russian Federation.

“A steady course towards positive changes allows us to count on the execution of the federal budget this year with a deficit at the level of the initial forecast of 2% of GDP. According to the Ministry of Economic Development, against this background we can talk about the continuation and even improvement of these trends next year,” said Mikhail Mishustin. The government is also focusing on the dynamics of monthly GDP – in July, according to the Ministry of Economy, in annual terms GDP exceeded the level of last year by 5%, and in seven months of 2023 compared to the same period in 2022, growth exceeded 2% – and on the growth of investment activity. Based on the results of the first half of 2023, the increase in investment is 12.6%, it is ensured by the investment of organizations’ own funds, and it is expected that this trend will continue and possibly intensify in 2024.

The normalization of the budget process allows the government to more calmly set up next year’s budget – by October 1, the draft, we recall, must be submitted to the State Duma. On Friday, as the prime minister put it, “the remaining forks in key indicators” of the 2024 budget were discussed in the closed part of the meeting. From the available information it follows that its structure and priorities will not change significantly. So far, it is known that the government commission on budget plans previously adopted a small reduction in expenses for 2024 with their subsequent distribution to priority areas – this was previously confirmed by Finance Minister Anton Siluanov. We are talking about cutting by 10% unprotected budget items that do not affect social obligations (pensions and benefits, salaries of public sector employees, transfers to regions, etc.). Such a frontal (uniform across all departments) reduction would include expenditures of 450 billion rubles, with the total budget expenditure amounting to 29.4 trillion rubles. this is approximately 1.5% of all allocations.

Vadim Visloguzov