Russia's budget deficit could exceed planned figure in 2025 if oil prices remain around $60/bbl

MOSCOW. March 4 (Interfax) - Russia's Finance Ministry maintains its estimates for executing the federal budget in 2025, though does not rule out that the deficit could exceed the plan of 0.5% of GDP if current oil prices remain around $60 per barrel.

"We are trying to focus everyone on the structural balance [of the budget] rather than on the overall balance. This is the target indicator included in the budget structure and budget rules. The overall balance, among other matters, depends on oil prices, so it is subject to volatility. Accordingly, it is like reading tea leaves when we guess the overall balance. Our estimates for the overall balance have not changed, though they do depend on the oil price. $70 per barrel is included in the budget. We currently see closer to $60/bbl. Accordingly, if the level remains closer to $60/bbl, then the deficit would be larger; less than 1% of GDP larger," Deputy Finance Minister Vladimir Kolychev told reporters.

"However, I repeat that we are more focused on the structural balance with baseline oil and gas revenues, and this is what we must achieve according to both the law and in terms of meaning," he said.

"Overall, we are more or less reaching the same seasonality for the quarter, namely that we had a surge in expenses in February last year, in January this year. They will most likely be lower in February than last year," Kolychev said regarding the substantial level of expenses in January that surged 73.6% year-on-year to 4.377 trillion rubles.

He said that these dynamics would gradually smooth over the course of the year, though with the traditional surge in spending in December.

"As always, there is a surge in December owing to social payments being remitted. This is an objective occurrence specifically in January and in December," Kolychev said.

This year's budget law envisages a deficit of 1.173 trillion rubles, or 0.5% of GDP. Preliminary data indicate that the budget was executed at a deficit of 1.706 trillion rubles, or 0.8% of GDP, in January. The Finance Ministry attributes the deficit level in January predominately to advanced financing of expenses in the first quarter, noting that this will not affect the quarterly trajectory and implementing the target parameters of the structural balance for 2025 as a whole.