​The formally approved 2021 Russian budget is likely to be balanced

RUSSIA ECONOMICS - In Brief 14 May 2021 by Alexander Kudrin

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The Finance Ministry reported that the oil-and-gas revenues soared on a m-o-m basis and reached R893 bn in April 2021 (versus monthly average R540bn in 1Q21). This increase could be partially explained by lagged effects of the increased oil price earlier in the year. A bit weaker ruble in April also helped. Increased volumes of taxed crude oil and products combined with increased gas exports in the previous months should have also positively affected oil-and-gas revenue flow.The flow of non-oil-and-gas taxes remained stable, having reached nearly R1.3 trln in April. Total federal budget revenues reached R2.2 trln in April alone and R7.5 trln in 4M21. The government spent a bit less than R2.3 trln in April and R7.3 trln in 4M21. Therefore, despite a moderate deficit in April (around R82 bn) the budget remained in surplus in 4M21 (R 205 bn).Overall, in 4M21, the government collected nearly 40% of revenues targeted for the year, which was well ahead of the plan, and elevated inflation help to collect more taxes. Federal budget spending reached 33.8% of the annual target, i.e., the government allocated spending evenly so far.It looks likely that in 2021 as a whole, the oil-and-gas revenues will significantly exceed the budgeted plan (around R6.0 trln) and could reach R8.0 trln and even exceed this level. The non-oil-and-gas taxes will also exceed the annual target of nearly R12.8 trln. Currently, GKEM Analytica expects around R0.8 trln of such revenues in addition.Given that the formally approved federal budget spending should reach R21.5 trln in 2021, one can expect the surplus budget. However, as the revenue flow is strong, some budgetary amendments are likely.Evgeny Gav...