Russian finance minister sees budget deficit exceeding targeted 2% of GDP in 2023

MOSCOW. July 25 (Interfax) - Russia's federal budget deficit could exceed the planned 2% of GDP this year, Finance Minister Anton Siluanov indicated.

"Right now the size of the deficit is approximately at the level that we factored into the plan. For the year it will be 2-2.5% of GDP. It will be possible to say more precisely in the second half of the year," Siluanov said in an interview with aif.ru.

"We have sufficient resources to both carry out planned expenditures and additional ones that will arise in the course of the year," he added.

The deficit was 2.595 trillion rubles in the first half of 2023, according to preliminary data from the Finance Ministry, while the plan for the year is 2.9 trillion rubles. As of July 20, federal budget revenues totalled 12.779 trillion rubles, spending amounted to 16.421 trillion rubles and the deficit was 3.642 trillion rubles, according to the Electronic Budget portal.

The Finance Ministry attributed the growth of the deficit at the beginning of the year in part to accelerated financing of a number of expenditure items in January-February.

Siluanov has said earlier that there might be slight deviations from the federal budget deficit target of 2% of GDP in 2023, but he said they were possible both ways.

In the interview, he confirmed estimates according to which the government will manage to collect the baseline level of oil and gas revenues.

"We're seeing now that we're managing to reach 8 trillion rubles in [oil and gas] revenues. So far money has not been put in the [National Welfare Fund], we're only taking from there, since oil and gas revenues are affected by external restrictions. But it's not even about the restrictions, as we're not selling at the ceiling anyway, but according to the market. The issue is the timeliness of revenue coming into the country, the growth of the cost of delivering oil," Siluanov said.

"If the deficit was lower, then we wouldn't need to take so much debt, the cost of loans would be lower," Siluanov said, commenting on rising borrowing costs on the domestic government debt market.