The Accounts Chamber assessed the draft budget for 2024–2026

The Accounts Chamber, in its conclusion on the draft budget for the next three-year period currently being considered by the State Duma, noted a significant increase in revenues and expenses in 2024, pointed out the incomparability of the macro forecasts of the Ministry of Economy and the Central Bank, reproached the Ministry of Finance for the lack of an explanation for the adjustment of the budget rule, and identified the risks of not achieving the new oil cut-off price of $60 per barrel, and also recorded an increase in the share of defense spending and servicing the public debt, while the share of government investment and transfers to the regions decreased.

The State Duma Budget Committee on Monday began considering the draft budget law for 2024–2026, submitted by the government on September 29. By this time, the remaining committees had made their comments on the draft, carefully criticizing its individual norms affecting the areas they supervised (see Kommersant on October 16).

Let us recall that the 2024 budget differs from all previous ones by a sharp increase in both income and expenses – by 22% (up to 35.1 trillion rubles) and 16%, respectively (up to 36.7 trillion rubles). After such a pumping of the economy with money, the Ministry of Finance for 2025, as part of the normalization of budget policy, envisages a reduction in both parts of the budget (see Kommersant on September 30). The expenditure structure of the 2024 budget reflects new priorities: military appropriations will be increased by 1.68 times compared to this year and will reach 25% of all spending. The “National Economy” section will suffer somewhat from this, but not social expenses – they will also increase. At the same time, servicing government debt will also become noticeably more expensive. According to the Ministry of Finance’s calculations, all this, however, will not lead to an increase in the budget deficit, which is planned at an acceptable level of 0.9% of GDP.

Traditionally, the most comprehensive reaction, which the budget committee, which prepares the consolidated review of the Duma members, largely focuses on, is the conclusion of the Accounts Chamber (CA), published yesterday. Presenting it at a meeting of the budget committee, acting head of the joint venture Galina Izotova called the increase in revenues planned by the Ministry of Finance unprecedented and expenses significant. She noted that compared to 2019, budget expenditures will double in 2024.

In the conclusion itself, the Accounts Chamber first of all noted the incomparability of the initial conditions for the functioning of the Russian economy in the forecast of the Bank of Russia and the Ministry of Economy. The Central Bank is more pessimistic and suggests a tighter monetary policy to accelerate the return of inflation to the target. In addition, the Central Bank still uses the Urals price, while the Ministry of Economy in its macro forecast for the first time uses the concept of “export price for Russian oil”, which is not entirely clear (including to the Accounts Chamber).

The amendment to the budget rule proposed by the Ministry of Finance in the draft (an oil cut-off price of $60 per barrel will replace the current base level of annual oil and gas revenues of 8 trillion rubles) also alarmed state auditors. They note that the government did not provide a rationale for adjusting the budget rule in the explanatory note. At the same time, there are “risks of not reaching” the declared $60 per barrel – it is noted that the price of Urals fell below this threshold amid crises in 2015–2017 and in 2020. Commenting on this remark by the joint venture, Deputy Minister of Finance Vladimir Kolychev explained yesterday that $60 per barrel is the same annual 8 trillion rubles expressed in rubles, but it is better to calculate in a new way, “and the market asked us for this.”

Assessing the expenditure side of the budget, state auditors record an increase in the share of spending on defense and servicing the national debt, with a decrease in the share of allocations for national issues, law enforcement, the national economy and transfers to the regions. According to their calculations, in real terms (that is, taking into account inflation), budget expenditures on education in 2024 will remain at the level of this year, on healthcare they will decrease slightly, and on social policy they will increase. Recording a noticeable increase in the national debt over the next three years, the joint venture notes that the cost of servicing it by 2026 compared to the 2023 execution estimate will increase by 2.2 times and exceed the total federal budget spending on health care and education.

Vadim Visloguzov