Wider budget deficit in 2022 caused partly by bringing some additional spending from 2023 forward - Siluanov
MOSCOW. Dec 27 (Interfax) - The increase in the federal budget deficit in 2022 from 0.9% of GDP to 2% of GDP was due to additional spending, including social spending, as well as bringing additional spending from 2023 forward to the current year, Finance Minister Anton Siluanov said.
"Expenditure was 29 trillion rubles, and the deficit 0.9% of GDP. Now we expect that there will be more than 30 trillion rubles. After the start of the special operation, macro conditions changed, inflation increased, measures were taken to support children, families with children and so on, and this needed a rather large amount of resources," he said at his year-end briefing.
He said the budget deficit was projected to narrow from 2% of GDP in 2023 to 0.7% of GDP in 2025. To fulfill this plan faced with increased costs, it was decided to finance some of next year's spending this year, since there is now an opportunity for this.
The 2023 budget deficit was originally planned at 2% of GDP, but some expenses arose during the budget process, when the draft budget was in parliament. "So we could not factor all the expenses of the next year into the budget, and so as not to undermine the budget process, we decided to finance these additional expenses this year. This year allows us to do this," Siluanov said.
"We want to follow this trend [to reduce the deficit in the coming years], to keep within it, despite all the additional spending that has arisen this year, including due to social spending. We see an opportunity to bring some spending forward from next year to this year. Therefore, in order to ease pressure for the next year and take advantage of the opportunities of the current year, we have decided to limit the budget deficit to 2% of GDP this year, 2% of GDP next year, and then a downward trend. We are looking at this year in conjunction with the amount of expenses and obligations of the next year, maneuvering expenses to balance this two-year period - the current year and the next. Therefore, the use of additional expenses in 2022, which, in many ways, make 2023 easier, was also the basis for increasing budget spending, and the deficit from 0.9% to 2% of GDP," Siluanov said.
He said 1.062 trillion rubles were allocated to support families with children in 2022. Additional costs associated with the indexation of the minimum wage by 10% amounted to 5.6 billion rubles, non-contributory pensions to 371 billion rubles and state pensions to 32.4 billion rubles.
All decisions to transfer expenses were discussed with the Bank of Russia. "The Central Bank took part in all our debates and discussions. The Central Bank, of course, factored into its policy those budget decisions that are being taken for this and next year," the minister said.
Siluanov said around 2 trillion rubles of National Wealth Fund money would be used in 2022.
"This year, there'll be just over 2 trillion rubles [of expenditure from the NWF]. This is less than initially - we offset this with new borrowing. We faced a dilemma - to spend the NWF, or both, or more emphasis on borrowing. We decided to go to the market and borrow, to preserve the NWF as much as possible for investments and as a reserve," Siluanov said.
It was possible to use 3.194 trillion rubles of NWF money to finance the deficit in 2022.
As of the end of November, NWF money had been used twice to finance the deficit - in October in the amount of 259.736 billion rubles and in November for 300 billion rubles. Earlier, the prime minister allowed the MinFin to use 1 trillion rubles from the NWF to cover the budget deficit by the end of the year.
Siulanov said that NWF money would in the current year be used to compensate funds for falling insurance premiums. "Next year, these deferred amounts, when they are returned, will replenish the NWF," he said.
Earlier, he said that 772 billion rubles remained at the disposal of businesses as a result of deferrals of insurance premiums this year.
There are risks of the budget being fulfilled in 2023 with a bigger deficit than currently planned, Siluanov said. "We have determined expenses for the next year. Our task is to back them with resources. Is a larger budget deficit possible? It is possible if revenues are lower than planned," he said, adding that there is a certain margin for financing expenditures in the amount of 970 billion rubles. "This is what should be credited to the NWF, this too is essentially our additional sources," the minister said.
In general, he said there were price and restrictive risks for revenue fulfillment next year. "If we don't sell oil to some countries [due to price cap set by a number of countries], and sell to other countries, will this reduce production and export of energy from Russia? There has been a lot of talk that this might be the case. The question is whether our oil and gas budget will be replenished to the extent we have envisaged or not. If everything goes as planned - exchange rates, price ratios, then we will put it in the NWF. If not, we'll do the reverse. Or it may be possible to borrow in the market in the same way as in the current year," he said.
"We see external risks, they persist and they may materialize. Although I cannot say that we have planned the forecast and budget parameters optimistically. Oil - $70, the exchange rate - 68 rubles, gas - $700 per thousand cubic meters. We see there might even be better forecasts for the wage fund and insurance premiums. Profit will depend on many factors - restrictive and exchange rate factors. First of all, these are all our metallurgists, coal miners, everyone who works for export, oil, fertilizer producers," he said.
In Siluanov's opinion, next year's expenses have been set "fairly realistically." "No one knows how events will unfold. The budget has been drawn up taking into account all the obligations that have been calculated to date. At the moment, based on the current realities and the capabilities of our institutions, the economy, and so on, all the reckoning has been done and reflected in forecasts for next year. If there are any new decisions, we will respond in the course of fulfillment," he said.