The Federal budget posted a surplus in January

RUSSIA ECONOMICS - In Brief 11 Feb 2022 by Alexander Kudrin

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The Ministry of Finance reported that the federal budget revenues reached nearly R2.1 trln in January and were nearly 39% higher than in January 2021. These revenues accounted for 8.3% of the annual plan, i.e., exactly one-twelfth of it. Note, that tax collection in January is traditionally low and the amounts collect in the following months are higher.It is not a higher oil price alone that contributed to additional revenues - the non-oil-and-gas revenues increased in January by 27.7% y-o-y. Therefore, in 2022 as a whole, the federal budget will significantly exceed the plan – unless some unexpected shock hits the global economy.In January, the government spent nearly R 2.0 trln – the same 8.3% of the annual spending plan. The surplus reached nearly R 125 bn. Budget execution statistics support our view that in mid-year the government will increase expenditures and completely re-draft budgets for the rest of the years of the 2022-2024 rolling budget plan.In such an environment, inflation m-o-m, which is expected to start coming down in the next months, will demonstrate an upturn at the end of the year.Evgeny GavrilenkovAlexander Kudrin