The federal budget deficit for seven months amounted to 1.8% of GDP, with a plan for the year of 2%

According to the results of seven months, the federal budget deficit amounted to 1.8% of GDP, while the plan for the year was 2%, the Ministry of Finance said, which, after a two-year pause, unexpectedly returned to the publication of this base indicator. After a monthly surplus in the previous two months, the budget returned to a deficit in July. In general, over the seven months, the oil and gas part of the budget is still being filled with more than forty percent behind the level of last year, but VAT, the fees of which are going uphill on the growth of business activity and trade turnover in recent months, ensured a twenty percent increase in non-oil and gas revenues. The expenditure part of the budget, after a record advance in the first quarter, is reducing growth rates – counting from the second quarter, the increase in spending year-on-year in July amounted to only 2%.

Summed up by the Ministry of Finance results budget execution in January-July look ambiguous. The figures show that the rate of decline in income compared to last year is declining: minus 19% in May, minus 12% in June and only 8% in July. However, it is worth remembering that we are talking about a comparison with the income base of last year, which after May, against the backdrop of sanctions and the first months of the military operation, began to decline. Therefore, when evaluating the budget in July, one can look at a monthly comparison that is considered not quite correct (due to seasonal and calendar factors). And it doesn’t look very positive. After two months of a surplus (a symbolic one of 20 billion rubles in May and a significant one of 434 billion rubles in June), in July the budget returned to a deficit, the size of which (determined from the data of the Ministry of Finance, the department has not given monthly figures for a long time) amounted to 222 billion rub.

But the Ministry of Finance on Tuesday published data on the deficit for seven months in the classical measurement – as a percentage of GDP. As it turned out, the size of the hole in the budget in January-July amounted to 1.8% of GDP.

The Ministry of Finance stopped providing information about the intermediate deficit in this form without explanation from June 2020 (in 2021 they appeared once, but disappeared again). In rubles, the deficit amounted to 2.817 trillion rubles in seven months. with a plan for the year of 2.925 trillion (2% of GDP). The Ministry of Finance believes that at the end of the year the benchmark, if it is exceeded, is insignificant. The head of the department, Anton Siluanov, said at the end of July that the deficit in 2023 might not exceed 2.5% of GDP.

The revenue side of the budget in January-July was 14.5 trillion rubles. (minus 7.9% compared to the same period last year). And the situation with the two components of income is still fundamentally different. Oil and gas revenues (4.2 trillion rubles) are in a stable minus. Now it is minus 41% compared to last year. Separately, in July, however, these revenues from the quarterly payment of additional income tax exceeded the base level. As a result, in August, the Ministry of Finance will turn the budget rule in the “right” direction and, for the first time this year, will not sell, but buy foreign currency and gold (for more details, see below). “Kommersant” dated August 4). Further, oil and gas fees may grow both due to the weakening of the ruble (the exchange rate affects taxes with a monthly lag), and due to the rise in price of Urals oil.

With non-oil and gas revenues (10.3 trillion rubles), the situation is noticeably better – plus 20% compared to last year. Such growth was ensured by the main Russian tax in terms of the amount of fees – VAT.

Its receipts for seven months (domestic and “import” tax together) on the growth of trade turnover amounted to 6.3 trillion rubles, which is an increase of 21% year on year. At the same time, income tax collections are not impressive – 1 trillion rubles, minus 1% compared to the comparable period.

Budget expenditures for seven months – 17.3 trillion rubles, plus 14% over the same period last year. Their abnormally high growth rates, which the Ministry of Finance explained by generous advance payments and ahead of government purchases at the beginning of the year, continue to slow down – in the first quarter, spending was 34% higher than last year. The agency is now celebrating a return to “normal” spending dynamics, reporting a year-on-year growth of just 2.3% since the start of the second quarter.

Vadim Visloguzov