Putin favored the government: the Russian economy showed unexpected growth for the West

Vladimir Putin announced the completion of the recovery phase of the Russian economy. The country’s GDP, he said, has returned to the level of 2021, and now “it is important to create conditions for further development.” The president called next year’s budget, which the government is finalizing, balanced and promised that all social obligations will be fulfilled accurately and on time. Despite the sanctions and SVO, the state no longer seems to be experiencing acute problems with revenues.

Vladimir Putin held a meeting on the draft federal budget for 2024–2026. This is a necessary stage before consideration of the financial plan at a government meeting and further submission to the State Duma, which should happen no later than October 1.

According to the president, the draft budget has already been prepared. “In my opinion, it turns out to be balanced,” Putin said, praising the government “for its colossal work in terms of volume and complexity.”

As in previous years, the budget was drawn up based on national priorities and national interests. It guarantees “the strict fulfillment of all social obligations to people.”

Officials’ fears that spending will have to be cut in 2023 seem to be a thing of the past. “In terms of a number of key indicators, the situation is significantly better than previous estimates and forecasts,” Putin emphasized, recalling that initially “some people even painted a minus for us.” Then the forecast was corrected to an increase of 1.2%, but this level has already been exceeded. At the end of the year, GDP growth, according to the president’s estimates, may reach the level of 2.5–2.8%.

Economic development ensures an increase in tax revenues, due to which the budget hole is gradually tightened. Non-oil and gas revenues, according to Putin, are significantly higher than last year’s figures. “And oil and gas revenues in July-August recovered approximately to the level of last year, and – taking into account the situation on world markets (that is, an increase in oil prices) – active growth continues.” In general, the income situation is currently developing according to the most favorable of all scenarios available at the beginning of the year.

Putin called the current budget deficit “small.” And indeed: in January–August the financial plan was implemented with a deficit of 2.3 trillion rubles, or 1.5% of GDP. Although many experts, taking into account the failure observed in the spring, expected a hole of 5–6 trillion rubles. due to the high costs of water treatment and the impossibility (as it seemed then) of compensating for losses using energy resources.

Putin recalled that in August revenues amounted to 230 billion rubles. exceeded expenses. His assistant and, apparently, the main confidant on economic issues, Maxim Oreshkin, recently said that “the budget deficit in 2023 “will not exceed the forecast 2% of GDP and may be even lower.” In 2024, “under certain scenarios,” according to his estimates, even a budget surplus is possible.

Officials have not yet disclosed the details of the macroeconomic forecast, on the basis of which the budget for the next three years is drawn up. However, as often happens recently, this confidential information became known to the Western media: Bloomberg reported that, according to officials, the Russian economy has adapted to the costs and sanctions and will continue to grow in the next three years, albeit at a slightly slower pace than Now. In particular, in 2024, GDP growth is expected to be 2.3%.

Also, the Cabinet of Ministers is no longer afraid of the oil price ceiling (the average price for Urals will not fall below $66.3 per barrel) and hopes to curb the dollar (the average dollar exchange rate is projected at 87.4 rubles). In this situation, inflation should drop to 4% next year.

It is noteworthy that the Ministry of Finance and the Ministry of Energy neither confirmed nor denied Bloomberg’s information. However, some published figures, according to leaks from these departments, are controversial.

Vladimir Putin also acknowledged the existence of disputes within the government over the macroeconomic forecast and the draft budget. However, according to him, it is time to end the discussions. “There is not much time left before the package of relevant bills is submitted to the State Duma – we need to put a final point,” he said, noting that at the meeting it will be necessary to “fine-tune” the submitted documents and “clarify some details.”

The most important problem, he said, is the acceleration of inflation, and “the main factor here is the weakening of the ruble.” “It is necessary to clearly understand its reasons and make appropriate decisions in a timely manner, without delay,” Putin said.