The Accounts Chamber warned of a shortage of money in Russia

The state will have to darn budget holes through new borrowing

In 2023, the Russian treasury risks missing half a percent of GDP. At least, such forecasts are given by the Accounts Chamber in its summary of the draft federal budget for the next three years. According to the agency, the decline in the country’s income will depend on the next Western sanctions, and the state will have to close holes in the budget through new borrowing, which will not be so easy to make.

The opinion on the draft law on the federal budget for 2023-2025, published recently by the Accounts Chamber, says: the volume of shortfalls in the Russian treasury in the next year alone could amount to 639 billion rubles, or 0.43% of GDP. In 2024, the risks of shortfalls in funds may increase: the domestic economy risks losing another 617 billion rubles (0.36%). Even in 2025, the state budget of Russia, according to the project, will continue to experience a small deficit – a little less than one percent of the costs will have to be replaced by officials in domestic markets. The main source of covering the deficit will be government borrowing, and the government has postponed the transition to a steady growth of the economy until 2024, when “GDP dynamics will acquire a positive direction and grow by at least 2%.” Now the Finance Ministry will have to borrow 1.7 trillion rubles on the domestic market. Since the beginning of this year, Anton Siluanov’s department has not climbed into such “modest” debts.

The amount, of course, is impressive. State revenues for next year are planned at 26.13 trillion rubles, which is 1.6 trillion less than expected this year. Moreover, in comparison with the initial level, due to the multitude of new obligations, state expenses have already increased by about 4 trillion rubles.

As Siluanov explained, the government’s goal is to make revenues equal to expenditures. At the same time, the country will rely not only on oil and gas revenues, which have been forming the state money box for more than a decade, but on extra-planned revenues from various sources. Officials do not specify where to get additional financial reserves, but they say that although the replenishment of the NWF is not expected next year, the treasury can count on almost 940 billion rubles in 2024, and more than 655 billion rubles in 2025.

Leading expert of the Center for Political Technologies Nikita Maslennikov believes that state economic departments, sharing their forecasts, are rather camouflaging obvious budget holes that almost all Russians will experience in the near future. Officials are confident that the financial arrears of domestic producers will be leveled at the expense of the National Wealth Fund, which previously received money from high export prices for hydrocarbons. In the current conditions, the state will have to determine exactly how much it will spend: how much of the proceeds to allocate to the defense industry and how much money to allocate to improve the quality of life of the poor. If there is not enough money, then they will re-borrow from each other (the state from “private traders” or vice versa). “In any case, new borrowings will cost a pretty penny, the interest on which will fall on the shoulders of ordinary consumers. The Accounts Chamber gives only a superficial assessment of the state’s budget expenditures. For ordinary Russian inhabitants, the extra ruble spent under the current conditions turns into a “chervonets”: inflation has long been “eating up” at least 10% of the wages of Russians. It turns out a vicious circle. Foreign policy needs, including military measures, require new budget expenditures. In the current environment, Russian economic departments will borrow money primarily on the domestic market. That is, private banks. It turns out a strange situation: in order to support the domestic economy, the state issues loans to private capital, whose representatives later purchase government debt securities. As a result, money is transferred from account to account, and the economy remains without investment. Half a percent of the income that the Russian treasury will miss in 2023 is unlikely to become a critical mark for ordinary Russians, but the well-being of each of us will worsen by this amount, ”warns Maslennikov.