Russia's federal budget deficit totals 1.7 trln rubles, 0.8% of GDP, in Jan; exceeds annual plan

MOSCOW. Feb 11 (Interfax) - Russia had a federal budget deficit of 1.706 trillion rubles or 0.8% of GDP according to preliminary data in January 2025, the Finance Ministry said in a monthly brief.

The budget law envisages a deficit of 1.173 trillion rubles or 0.5% of GDP in 2025.

The Finance Ministry explains January's deficit level as primarily resulting from advanced financing of expenses in the first quarter, saying that this should not affect the quarterly trajectory and implementation of the target parameters for the structural balance for 2025 overall.

There was a budget deficit of 124 billion rubles or 0.1% of GDP in January 2024.

A similar situation was seen in January 2023, when, according to the MinFin's preliminary data, there was a budget deficit of 1.776 trillion rubles, which was 14 times the January 2022 deficit of 125 billion rubles. At the time, this was associated with the introduction of a single tax payment, which reconfigured tax revenue for the fiscal system, as well as with accelerated VAT refunds and a more significant advance financing of expenditures than in previous years.

The deficit in December last year was about 3 trillion rubles. Federal budget expenditures increased by 73.6% year-on-year to 4.377 trillion rubles. "The accelerated financing of expenses in January 2025 (as well as in early 2023-2024) is also associated with the prompt conclusion of contracts and advance financing for individual contract expenses. No significant changes in the quarterly dynamics of the execution of expenses are expected this year," the ministry said.

It said that in general, federal budget spending this year would be carried out in keeping with the fiscal rule and based on maximum permissible budget allocations and additional non-oil and gas revenues if they are generated during the year. The ministry also said certain expenses for the current year had been financed by the advance transfer of additional non-oil and gas revenues received at the end of 2024. "This will ensure increased flexibility in managing maximum permissible budget allocations in the current year, including in light of a possible increase in federal budget obligations that depend on the key rate, due to the Bank of Russia raising its forecast path in 2025," the ministry said.

Expenditures on national projects in January amounted to 399 billion rubles, or 6.8% of the planned budget allocations. The execution was highest for the national projects: "Efficient Transport System" - 11.7%, "Long and Active Life" - 13.8%, "Personnel" - 11.3% and "Family" - 9.3%. It was 0.3% for the projects "International Cooperation and Export", "Efficient and Competitive Economy" and "Unmanned Aircraft Systems". There was zero execution in January for the projects "Tourism and Hospitality", "Means of Production and Automation", "New Materials and Chemistry" and "Development of Space Activities of the Russian Federation for the Period to 2030 and further to 2036".

Federal budget revenues rose 11.4% to 2.671 trillion rubles. Non-oil and gas revenues grew 9.3% to 1.882 trillion rubles but VAT revenues decreased by 1.1% to 905 billion rubles. The MinFin said this was due to accelerated tax refunds in the first month of the quarter and that this would not affect the quarterly revenue dynamics. "In general, the trajectory of non-oil and gas revenues at the beginning of this year, along with the higher tax base last year, paves the way for dynamics to be significantly higher than those budgeted," it said.

Oil and gas revenues rose 16.9% to 789 billion rubles, due mainly to a higher average dollar exchange rate and gas prices. Oil and gas revenues exceeded their base amount of 758 billion rubles, and are expected to exceed it steadily until the end of the year.

Planned federal budget revenues for the year are 40.296 trillion rubles and expenditures are 41.47 trillion rubles.