The Russian government approved an extensive budget package

At a meeting on Friday, the government approved an extensive budget package, which includes a draft federal budget for 2024–2026 and a forecast of socio-economic development for this period. Next year’s budget is drawn up with a deficit of 0.9% of GDP, which is comfortable for the authorities. At the same time, relative to the previous forecast parameters of the budget for 2024, its revenues and expenses have increased significantly: with revenues at the level of 35 trillion rubles. the planned expenses are estimated at 36.6 trillion rubles. The news of the presented budget was the return announced by the Ministry of Finance in 2024 to the previous version of the budget rule with the establishment of a “cut-off price” for oil, but at the level of $60 instead of the previous $44.2 per barrel.

The government on Friday approved the draft budget for 2024-2026. Then, together with the macro forecast and a package of related documents, it will be submitted to the State Duma by October 1. As Prime Minister Mikhail Mishustin noted at a meeting of the Cabinet of Ministers, during the preparation of the budget, the government tried to make “calibrated and optimal decisions,” guarantee the fulfillment of social obligations and provide for “continued development of the supply-side economy with an emphasis on the country’s potential and its resources.” The sources of growth are identified as investment and consumer activity, as well as the expansion of manufacturing industries.

Presenting the macroeconomic forecast that formed the basis of the budget, the head of the Ministry of Economy, Maxim Reshetnikov, said that in 2024 GDP growth is expected to be 2.3% after 2.8% in 2023 (for more information about the forecast, see Kommersant from 12 And September 19). This assessment, according to the minister, was made taking into account the “budgetary and credit impulse” for economic development. He admitted that the GDP growth rate will be lower than it would have been without the current tightening of monetary policy (in particular, raising the key rate to 13%).

In the future, GDP growth is expected at a level of just over 2% per year, which, according to the minister, is considered as “reaching potential growth rates, taking into account existing restrictions, primarily technological and from the labor market.” Investment growth is projected to be around 3% over the entire three-year period (after 7.6% in 2023). Inflation in 2024 is estimated at 4.5% (including due to the indexation of housing and communal services tariffs to within 9.8% after missing their increase in 2023).

The federal budget was drawn up with a deficit throughout the entire three-year period.

As Mikhail Mishustin noted, the government tried to minimize its size “as much as possible.” Next year the deficit will be 1.6 trillion rubles, or about 0.9% of GDP. It is planned to finance it primarily through internal borrowing, the volume of which during 2024–2026 will amount to about 4 trillion rubles. in year.

Budget revenues for 2024 are 35 trillion rubles, expenses are 36.6 trillion rubles. Note that, relative to the indicators from the current budget law for 2023–2025, revenues and especially expenses next year will increase significantly: the law assumed that revenues would amount to 27.2 trillion rubles, expenses – 29.4 trillion rubles. As Mikhail Mishustin explained, this increase in spending is explained by a significant increase in funding for measures to implement the president’s message. In total, 2.5 trillion rubles have been allocated for these purposes, according to the head of the Ministry of Finance Anton Siluanov. annually (including indexation of the minimum wage by 18.5% in 2024 and payments of monthly benefits to families with children, on which 4.4 trillion rubles are planned to be spent over three years).

Also among the largest expenditure items in 2024 is the implementation of national projects, for which it is planned to allocate about 3 trillion rubles. in 2024.

More than 2.7 trillion rubles have been allocated to support the civil industry. Of these funds, the majority will go to the auto industry (including supporting demand at a “cost” of 1.4 trillion rubles). Also, as it was announced, money is provided to support aircraft and machine tool manufacturing, and for the development of unmanned systems.

According to Anton Siluanov, the implementation of budget policy is planned “in the logic of the budget rule with a gradual achievement of the primary budget balance by 2025.”

Let us remind you, the budget rule assumes the accumulation of additional oil and gas revenues in the National Welfare Fund (NWF) and curbing the growth of expenses. In 2022, these rules did not work, and most of the additional oil and gas revenues went to current expenses, but by the end of 2022, the government passed a law on new, softer budget rules through the State Duma. Instead of the “cut-off price” of oil, the Ministry of Finance began to focus on the nominal volume of oil and gas revenues, which is necessary to cover expenses (8 trillion rubles; revenues in excess of this amount should be sent to the National Welfare Fund). In a truncated form, the new budget rule began to work in 2023 (in terms of replenishing the reserves of the National Welfare Fund), in full (with rules on establishing an expenditure ceiling) it should come into force in 2025.

Anton Siluanov announced that next year the budget rule is planned to be resumed in its previous form – in the draft budget the base oil price is set at $60 per barrel (the average price, according to the macro forecast, in 2024 will be $85 per barrel of Brent oil). The minister explained: in fact, $60 per barrel corresponds to the 2023 benchmark – the annual amount of basic oil and gas revenues of 8 trillion rubles. Note, however, that the new “cut-off price” is noticeably higher than the previously valid one. Before the tightening of sanctions affecting the volume of Russian oil supplies and the size of the price discount, this threshold was $40 per barrel (plus indexation for inflation in the United States) – in particular, in 2022, the “cut-off price” according to the previous formula was supposed to be $44.2 per barrel.

Evgenia Kryuchkova, Vadim Visloguzov