The Federal budget surplus exceeded R2.3 trln in 11M21

RUSSIA ECONOMICS - In Brief 13 Dec 2021 by Alexander Kudrin

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The Finance Ministry reported that the federal budget surplus exceeded R 2.3 trln amid strong revenue collection and rather moderate spending in November. In 11M total revenues exceeded the initial annual plan by 19.6% as oil-and-gas revenues exceeded the annual target by 36.6%. Non-oil-and-gas revenues were 11.6% higher than the full year’s target. On the expenditure side, the government allocated a bit less than R18.4 trln, i.e., 93.3% of the initial unamended plan that was set at R21.5 trln. As the government hinted that it would formally amend the budget and spend around R24 trln this year, federal budget expenditures should be close to R3.8 trln in December alone. If so, then this amount will be almost comparable with December 2021 federal budget expenditures when they reached nearly R3.9 trln. Though it cannot be ruled out that that the government won’t spend as much as the amended plan suggests.In any case, as total federal budget revenues exceeded R22.4 trln and since July monthly revenues consistently exceed R2 trln, in 2021 as a whole, total revenues may be close to R25 trln or even exceed it. Hence the budget can post in 2021 a surplus of around R1 trln as opposed to initially targeted nearly R2.8 trln deficit. Meanwhile, the expected spending spree in December is likely to keep inflation elevated in January 2022, but generally, in 1Q22 inflation y-o-y should be lower than in December 2021.Evgeny GavrilenkovAlexander Kudrin