The White House submitted to the State Duma a draft law on the federal budget for 2024–2026
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The White House on Friday submitted to the State Duma a draft law on the federal budget for 2024–2026. The financial plan for the next year is highlighted by a sharp increase in both income and expenses – by 22% and 16%, respectively. After such “pumping” of the economy with money for 2025, the Ministry of Finance, planning to normalize budget policy, plans to reduce both parts of the budget. The changed expenditure structure of the 2024 budget reflects new priorities: military appropriations will be significantly increased and will reach 29% of all expenditures. This, however, according to the Ministry of Finance’s calculations, will not lead to an increase in the budget deficit, which is planned at 0.9% of GDP.
The White House submitted a budget package to the State Duma on Friday ahead of schedule (the deadline established by law is October 1) – a draft budget for 2024–2026, accompanied by a large number of bills linked to it. This time, deputies did not have to pose in front of a cart loaded with thousands of pages sent by the government – for the first time, the budget package was submitted entirely electronically.
The general approach to the three-year financial plan was formulated by its main author, the Ministry of Finance, in the “Main Directions of Budget, Tax and Customs Tariff Policy”, published the day before: in 2024, the current expansive budget policy will continue, but already in 2025 it will normalize: budget rules will work in full force, and the country will begin to “live within its means” (see “Kommersant” for September 29).
Rising oil prices, gradually restoring greatly fallen oil and gas revenues, as well as a noticeable increase in VAT collections due to the revival of business activity, stabilized the budget situation this year – we recall that the deficit for eight months amounted to only 1.5% of GDP (see “Kommersant” for September 9).
This allowed the Ministry of Finance to draw up a very optimistic budget for 2024 in terms of the volume of revenues and expenditures.
Revenues to this year’s level (to the estimate updated at the time the budget package was introduced) should immediately soar by 22% – by 7.8 trillion rubles, to 35.1 trillion rubles. Expenses will not grow so much, but also quite significantly – by 16%, or 5 trillion rubles, to 36.7 trillion rubles.
Let us note that further, in 2025, after such a powerful breakthrough, the Ministry of Finance plans to reduce both revenue and expenditure. The department explains the increase in revenues planned for 2024, in particular, by a change in the tax base of the oil industry (in particular, only reducing the discount to the price of Urals when calculating taxes will bring 800 billion rubles), the weakening of the ruble, one-time income, and the introduction of “exchange rates” duties (they will add 604 billion rubles to the budget).
Nevertheless, such a powerful increase in both parts of the budget with a modest GDP growth in 2024 of 2.3% (after the expected 2.8% in 2023) looks somewhat surprising.
For comparison, this year relative to 2022, with very high inflation of 7.5% and a strong weakening of the ruble (from last year’s average of 67.5 rubles/$ to 85.2 rubles/$), the increase in budget items is expected to be incomparably smaller: for income – in the amount of 0.85 trillion rubles, for expenses – 0.6 trillion rubles. Let us note that by this year’s level, the main parameters of the 2024 budget will increase significantly not only in nominal terms, but also relative to the size of the economies. Income will increase from 17.3% to 19.5% of GDP, spending – from 19.1% to 20.4%.
In terms of the Ministry of Finance, such a budget really looks expansive. And this expansion will largely be directed towards “power” budget items. As follows from the materials for the submitted budget, expenditures under the “National Defense” section next year will immediately increase by 68% relative to the plan for 2023 (actual data on the current execution of expenditures, we remind you, are closed) – from 6.4 trillion to 10.8 trillion rubles Their share in all budget expenditures will increase from 21.2% to 29.4%. Another 9.2% (RUB 3.4 trillion) of the 2024 budget expenditures falls on “National Security and Law Enforcement Activities” (the growth compared to the 2023 plan is small – 2%).
The redistribution of money for military spending required a reduction in allocations for the “National Economy” section, which is a source for government investment.
The share of spending on the economy in total spending will fall from 13.6% to 10.6% (from 4.1 trillion to 3.9 trillion rubles). Previously, the largest section of the expenditure budget—Social Policy—will lose its primacy. Its share will decrease slightly and amount to 21.1% of all expenses (versus the previous 21.5%). In nominal terms, spending on social services, however, will increase – from 6.5 trillion planned for 2023 to 7.7 trillion rubles. They will also increase slightly in relation to GDP – from 3.9% to 4.3%.
The head of the Ministry of Finance Anton Siluanov announced yesterday at a session of the Moscow Financial Forum that in the structure of the budget “the main emphasis is on ensuring our victory: the army, defense capability, armed forces, fighters – everything necessary for the front, everything necessary for victory is in the budget.” Later commenting on this statement to journalists, he noted that the share of spending on the economy is indeed declining, since the share of defense spending has increased, “but in nominal terms, spending on the economy is not falling, but on infrastructure is growing.”
An approximately comparable increase in the revenue and expenditure parts of the budget should not unbalance it – the Ministry of Finance believes that the deficit in 2024 will amount to 0.9% of GDP (after the expected 1.8% this year) and that it will also be covered by National Welfare Fund savings and government borrowing.
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