Russian budget deficit will be 2% of GDP in 2022 and 2023, OFZ bonds the main source of funding - Siluanov
MOSCOW. Dec 8 (Interfax) - The Russian Finance Ministry has raised its estimate of the federal budget deficit for 2022 to around 2% of GDP from 0.9%.
"We are now carrying out a major transactions in the financial market, and at the end of the year substantial budget expenditures will be carried out, some of them from next year's expenditures. So this year we estimate the budget deficit at about 2% of GDP, and next year we will have approximately the same deficit, if all goes to plan, in order to then normalize fiscal policy and have a primary balance by 2025," Finance Minister Anton Siluanov told reporters.
Siluanov said at the end of September that the federal deficit might be more than an anticipated 0.9% of GDP.
"The estimate for the current year is slightly higher. Not taking into account the transfer of funds for restructured insurance premiums, which will also affect the budget deficit, the balance [deficit] will be about 2% of GDP," Siluanov said.
The deficit is expected to be 2% of GDP in 2023, but then shrink to 1.4% in 2024 and 0.7% in 2025.
Siluanov said market borrowing and the National Welfare Fund would be the main sources of financing the budget deficit in 2022 and 2023. But the Finance Ministry will rely on the NWF as little as possible, and prioritize placements of federal loan bonds, known as OFZ.
"Our plans for the current year and next year include two main instruments to finance the budget deficit: borrowing on the financial market and possibly tapping the NWF," Siluanov said.
"Given that the NWF is a serious resource to develop our economy's infrastructure, we are doing all we can to minimize the use of this source. So this year, at the end of the year, we are actively borrowing in the financial market to minimize NWF expenditure," he said.
The NWF will be used mainly to finance infrastructure projects, he said.