Russia posts budget deficit of 0.5% of GDP in H1 2024 vs 1.4% of GDP in H1 2023

MOSCOW. July 9 (Interfax) - Russia has posted a federal budget deficit of 929 billion rubles, or 0.5% of GDP, in H1 2024 according to preliminary estimates, the Finance Ministry said in a press release.

Amendments to the current year's budget law, which are under consideration in the State Duma, envisage a deficit of 2.12 trillion rubles, or 1.1% of GDP.

The federal budget deficit totaled 730.4 billion rubles in January-May 2024, according to revised information from the Federal Treasury; and the Finance Ministry had previously estimated it preliminarily at 983 billion rubles for the period, or 0.5% of GDP.

The deficit totaled 2.35 trillion rubles, or 1.4% of GDP, in H1 2023.

Budget revenues surged 38% year-on-year to 17.093 trillion rubles in H1 2024, while budget expenses rose 22.3% year-on-year to 18.022 trillion rubles in the reporting period.

The ministry said there was a sustained positive trend for key non-oil and gas revenues both for the federal budget, up 27% year-on-year, and the budget system as a whole, up 24%.

Non-oil and gas revenues for the federal budget rose 26.6% year-on-year in H1 2024 to 11.395 trillion rubles. Receipt of sales taxes, including VAT, increased 17.6% and were above target, forms a stable foundation for further rapid revenue growth.

Given the upward revision of the forecast for economic activity and the actual trajectory of the key taxes, amendments to the federal budget provide for a corresponding increase in non-oil and gas revenues, the Finance Ministry said.

Oil and gas revenues rose 68.5% year-on-year to 5.698 trillion rubles, mainly due to rising prices for Russian oil.

Oil and gas revenues exceeds their base amount, and in accordance with the socio-economic development forecast, oil and gas revenues are expected to be steadily higher than their base level in the coming months also.

The accumulation of windfall oil and gas revenues during periods of favorable price conditions and the use of National Welfare Fund funds to cover oil and gas revenue shortfalls in keeping with the fiscal rule ensures the budget system's resilience to oil and gas revenue volatility.

The volume of federal budget expenditures in 2024 is based on maximum approved budget allocations and the amount of windfall non-oil and gas revenues (in accordance with the fiscal rule). The federal budget amendments provide for the corresponding increase in spending.

Thus, the federal budget is being fulfilled in accordance with the parameters of the primary structural deficit defined in the budget law, and operations for the use/formation of the National Wealth Fund are carried out within the fiscal rule framework, the MinFin said.