Economist Nikolaev urged to be more careful about the rapid growth of non-resource income

With federal budget revenues not related to oil and gas, things are clearly better than with raw materials. According to Ministry of Finance statistics for January-November, the latter decreased by 22.8% over the year, to 8.33 trillion rubles. The agency attributes this to three factors: a high comparison base for last year, a decline in prices for Russian Urals oil, and a reduction in gas export volumes. But the nature of the rapid growth of non-oil and gas revenues has specifics that force us to treat what is happening soberly, without unnecessary enthusiasm.

In general, treasury revenues for 11 months of the year amounted to 25.96 trillion rubles, which is 4.8% higher than for the same period in 2022. Non-oil and gas revenues reached 17.7 trillion during the reporting period, increasing by 25.6% year on year.

As for oil and gas, the Ministry of Finance noted that their monthly dynamics remain at a level that significantly exceeds the total base size of 8 trillion rubles fixed in the draft budget for 2023.

At the end of the year, the budget deficit is expected to be within 1% of GDP (1.4 trillion rubles), Finance Minister Anton Siluanov said on November 22. So outwardly, judging by the latest data and forecasts from his department, the situation does not raise serious concerns.

Optimists may even interpret what is happening as a long-awaited slide of the Russian economy (or at least the federal budget) from the oil needle.

However, there are global circumstances that are clearly worth paying attention to. Is this why, for example, as the Accounts Chamber reports, the share of oil and gas revenues (in total budget revenues) in January-September dropped to a 16-year minimum of 28.3%? In 2013 they accounted for 50.2% of the total.

“Last year, energy prices went up, which allowed the state to receive very high income from exports,” explains Igor Nikolaev, chief researcher at the Institute of Economics of the Russian Academy of Sciences. – So the Ministry of Finance is absolutely right in pointing to the high base factor.

Today the situation is different: oil and gas prices have fallen, physical volumes of supplies abroad have decreased. And the dynamics are such that, against the background of prices expected in 2024, current quotes certainly will not seem low. According to forecasts, the world economy (following its main “locomotive” – the Chinese) will continue to slow down. Accordingly, raw materials will become cheaper, demand for them will fall, and the Russian budget will receive less income.

Plus, the sanctions pressure on Moscow does not weaken; on the contrary, the West is taking more and more new measures to expand secondary sanctions: for example, the United States has intensified the hunt for vessels of the “shadow fleet”, as a result, in September-October, three large shipping companies in Greece stopped delivering Russian oil.”

According to Nikolaev, non-oil and gas revenues were largely generated by a colossal budget impulse, which is likely to maintain current volumes in 2024. Trillions of rubles go mainly to the manufacturing industry. That is, enterprises make money mainly from government orders, produce various types of metal products and pay appropriate taxes. The circulation of funds occurs in a closed system, fenced off from the market economy.

Of course, MK’s interlocutor argues, the growth of non-resource income in itself is good, but its nature makes us more cautious about such seemingly inspiring figures.

Meanwhile, not all of his colleagues in the expert community agree with Nikolaev’s assessment. “Oil and gas revenues of the Russian budget actually decreased by 22.8% – but I don’t see anything terrible here, since this is mainly due to the “high base” effect,” says Artem Deev, head of the analytical department at AMarkets. – And, judging by the Ministry of Finance, their monthly dynamics remain at a higher level than usual. And if we take into account that part of the fuel damper compensation based on the results of October 2023 will be reflected in cash transactions only for December, then the oil and gas revenue indicator in November 2023 generally exceeds last year’s figure by 11%.”

Well, with non-oil and gas revenues, which show consistently high revenue dynamics, the situation is even better. Mainly, we are talking about turnover taxes and income taxes, since they are less susceptible to statistical base effects. Of course, Deev sums up, tax collection itself has increased. As a result, we are seeing a significant increase in the dynamics of income assumed during the formation of the budget.