Russian govt submits three-year draft budget to State Duma

MOSCOW. Oct 1 (Interfax) - The Russian government has sent the bill on the federal budget for 2027 and the planning period of 2028-2029 to the State Duma.

The order on its submission was signed by Prime Minister Mikhail Mishustin.

Draft budgets of extra-budgetary funds and a number of other documents of defining importance for state finances have also been sent to the State Duma, the government said in a statement.

It is planned that expenditures will amount to 48.8 trillion rubles and revenues will total 43.3 trillion rubles in 2027. For 2028 and 2029, expenditures are set at 50.9 trillion rubles and 53.9 trillion rubles, and revenues at 45.8 trillion rubles and 48.6 trillion rubles, respectively.

The federal budget deficit is therefore planned at the level of 5.5 trillion rubles, 5.1 trillion rubles and 5.3 trillion rubles.

As noted in the explanatory note to the draft, budget policy will be formed according to the logic of the fiscal rules, which assume that the base oil price for the purposes of the fiscal rule is set at $50 per barrel in 2027-2030, with the achievement of a zero primary structural budget deficit by 2029.

It was initially planned that a zero structural budget deficit would be reached in 2025, then the deadline was shifted to 2026. However, Finance Minister Anton Siluanov said in early June that the federal budget will now provide for reaching a zero structural deficit only by 2029. He did not provide figures, and the Central Bank of Russia, for which this indicator is one of the key ones when making decisions on monetary policy, set out a primary structural deficit for 2026-2028 of 2%, 1% and 0.5% of GDP, respectively, in the July forecast round.

The final projections turned out to be somewhat lower than the Central Bank's estimates. As noted in the materials to the draft budget, the primary structural deficit in 2026 will be 4.265 trillion rubles or 1.8% of GDP, in 2027 it will shrink to 1.5 trillion rubles or 0.6% of GDP, and it will be 500 billion rubles or 0.2% of GDP in 2028.

The main characteristics of the budget are determined based on projected GDP in 2027 of 248.323 trillion rubles, 263.724 trillion rubles in 2028 and 281.674 trillion rubles in 2029, as well as inflation of up to 4% for all three years.

The Finance Ministry has raised its estimate of the federal budget deficit in 2026 to 7.345 trillion rubles or 3.2% of GDP from 3.786 trillion rubles or 1.6% of GDP, provided for by the budget law for this year.

The budget deficit is forecast at 5.443 trillion rubles or 2.2% of GDP in 2027, which exceeds the figure of 3.186 trillion rubles or 1.2% of GDP planned by the current budget law. According to the draft, the deficit will be 5.12 trillion rubles or 1.9% of GDP in 2028, compared with the initial 3.514 trillion rubles or 1.3% of GDP.

In 2029 (subject to forecasting for the first time), the deficit is planned at the level of 5.245 trillion rubles or 1.9% of GDP.

The non-oil and gas deficit is expected at 12.447 trillion rubles (5% of GDP) in 2027 compared with the 12.236 trillion rubles (4.8% of GDP) determined by the current budget law for this year; it will be 12.753 trillion rubles or 4.8% of GDP in 2028 (previously, 13.219 trillion rubles and 4.8% of GDP were envisaged). In 2029, it will be at the level of 12.971 trillion rubles (4.6% of GDP).

Oil and gas budget revenues in 2027-2029 are planned at the level of 7 trillion rubles, 7.6 trillion rubles and 7.7 trillion rubles, respectively. At the same time, base oil and gas revenues will amount to 6.66 trillion rubles, 7.25 trillion rubles and 7.57 trillion rubles, respectively.

For non-oil and gas revenues, growth is expected from 36.3 trillion rubles in 2027 to 38.2 trillion rubles in 2028 and to 40.9 trillion rubles in 2029. The already adopted and planned changes in tax and other legislation, according to the Finance Ministry's estimate, will give additional revenues in 2027 in the amount of 1.472 trillion rubles, 983.4 billion rubles in 2028, and 1.165 trillion rubles in 2029.

The main sources of financing the deficit in the next three years will be state borrowings. Plans for domestic state borrowings have been adjusted upwards.

The placement of federal loan bonds (OFZ) is planned in the amount of 7.722 trillion rubles in 2027, 7.434 trillion rubles in 2028 and 8.004 trillion rubles in 2029. Repayment will amount to 1.323 trillion rubles, 1.436 trillion rubles and 1.887 trillion rubles, respectively. Net borrowing will therefore be at the level of 6.4 trillion rubles, 6 trillion rubles and 6.12 trillion rubles, respectively. The current budget law for 2027 provides for the placement of government securities in the amount of 5.386 trillion rubles, and 6.178 trillion rubles in 2028. Repayment for these years was planned in the amount of 1.323 trillion rubles and 1.436 trillion rubles, respectively.

At the same time, as was planned earlier, the National Wealth Fund (NWF) will not be used to finance the budget deficit in the next three-year period. A total of 459 billion rubles will be spent for these purposes in 2026. In fact, this entire amount was directed to financing the deficit in the first months of the year. Thus, 8.426 billion yuan and 5.148 tonnes of gold were sold for 154.568 billion rubles in January, and the proceeds were credited to the single account of the federal budget for the purpose of financing its deficit. In February, 13.277 billion yuan and 7.897 tonnes of gold were sold for 244.417 billion rubles for these purposes, and 3.183 billion yuan and 1.849 tonnes of gold were sold for 59.69 billion rubles in March.

At the same time, it is planned that the NWF will be replenished in 2027 based on the results of 2026 by 1.082 trillion rubles; in 2028-2029 the fund will also be replenished by the amount of additional oil and gas revenues - with 345.7 billion rubles and 379.9 billion rubles, respectively. It is planned that the NWF will amount to 13.216 trillion rubles at the end of 2026, 14.430 trillion rubles at the end of 2027, 15.07 trillion rubles at the end of 2028 and 15.583 trillion rubles at the end of 2029.