“The deficit is becoming chronic”: budget expenditures exceeded revenues by almost 4 trillion rubles

Economist Nikolaev believes that the deficit will not decrease much in 2024

Although the Russian economy stabilized in many areas last year, it could not avoid the budget deficit. This is evidenced by data from the Federal Treasury. It is reported that the consolidated budget deficit in 2023 increased to 3.9 trillion rubles. And the federal treasury deficit amounted to 3.23 trillion.

Statistics specify that compared to 2022, the consolidated deficit increased by 1.9 times, then this figure was 2.1 trillion rubles. That is, budget expenses have increased significantly compared to the year before. According to preliminary estimates by the Ministry of Finance, the federal budget deficit in 2023 amounted to 1.9% of GDP. Is it a lot or a little?

There is hardly any doubt that for the economy of any country, a hole in the budget, when there is not enough money for planned expenses, is bad. After all, in order to implement them, to carry out various programs, including social ones, we need to somehow plug the “financial hole” and look for additional funds.

How long will our country spend more than it earns? We asked the chief researcher at the Institute of Economics of the Russian Academy of Sciences, Doctor of Economic Sciences Igor Nikolaev, about this.

“The budget deficit at the end of last year was quite large,” he says. – But within the framework of what was predicted. The good thing is that we did not go beyond the government forecast. In addition, 1.9% of GDP is an acceptable figure; many countries have much larger budget deficits.

Another thing is that the deficit is becoming chronic in our country. It was in the previous two years, and the entire upcoming three-year period, from 2024 to 2026, is planned with expenses exceeding income. Yes, they are expected to be less than last year’s level, not 1.9%, but about 1% this year. But the symptom is not very good in any case. We need to look for additional funds to cover the deficit.

Let’s take into account that in 2023 oil prices were quite comfortable. What if they start to go down? Our economy remains largely resource-based, and problems may arise with financing expenses.

– How to explain that the budget deficit in 2023 is almost twice the level of 2022?

– At first glance, this result is surprising, but it is explainable. In terms of revenue and pricing, 2022 was a successful year for us. And although last year we achieved a GDP growth of 3.6% (versus minus 1.2% in 2022), the budget deficit turned out to be higher.

– Which budget is more important for the country’s economy: consolidated or federal?

– You can’t put the question like that, both are important. The federal budget is the income and expenses of the federal center, and the consolidated budget includes all budgets, including the federal one. This is a common “barrel”.

Although the question has a right to exist. Regional budgets largely depend on transfers from the federal budget. It turns out that the federal budget is key, so to speak, first among equals.

– In your opinion, what will the deficit be this year? Will we meet the predicted 1%?

– I believe that it is unlikely that it will be possible to reduce it. For various reasons, social expenses are increasing in the country. In these conditions, with the uncertainty of the revenue side, I would not hope that the deficit will decrease much compared to 2023.