Russian federal budget deficit at 1.8% or 2.8 trillion rubles in Jan-July, up 222 bln rubles in July

MOSCOW. Aug 9 (Interfax) - Russia's federal budget deficit was 2.817 trillion rubles in January-July 2023, according to preliminary data from the Finance Ministry.

The ministry returned to the publication of its estimates of the size of the deficit/surplus relative to GDP, reporting that the deficit amounted to 1.8% of GDP in the seven months. The last time the Finance Ministry provided an estimate of the size of the deficit/surplus to GDP was in June 2021 after a pause of nine months, but then it stopped doing so again.

Over the past month, the size of the deficit increased by 222 billion rubles - in January-June the Ministry estimated it at 2.595 trillion rubles.

Overall, a deficit of about 2.9 trillion rubles, or 2% of GDP, is expected for 2023. However, according to Finance Minister Anton Siluanov, it may amount to 2%-2.5% of GDP for the year as a whole.

Budget revenues dropped 7.9% year-on-year to 14.525 trillion rubles in the seven months. The Finance Ministry earlier estimated revenues in the first half of 2023 at 12.381 trillion rubles so, based on this, revenues totaled 2.144 trillion rubles in July.

Non-oil and gas revenues rose 19.8% year-on-year to 10.332 trillion rubles in the seven months after growing by 17.8% in the first half. The ministry said the dynamic of receipts for the federal budget's largest non-oil and gas revenues (turnover taxes, profit tax) remains steadily positive, including compared to 2021. The ministry also noted that in general the amount and trajectory of receipts for non-oil and gas revenues "show a significantly higher dynamic than what was factored in when drawing up the law on the budget."

Value-added tax revenues rose 20.5% year-on-year to 6.279 trillion rubles in the seven months after growing by 17% in the first half, while profit tax revenue fell 1% to 1.026 trillion rubles after dropping 4.3% in the first half.

Oil and gas revenues plunged 41.4% to 4.193 trillion rubles in the seven months, after dropping 47% in the first half, 50% in January-May and 52% in January-April. Baseline oil and gas revenues rose 31.4% to 4.59 trillion rubles.

The revision of the mechanism for defining the tax base for "oil" taxes and the reduction of corresponding price discounts will help to further increase tax revenues in the second half, the Finance Ministry said.

The ministry also said that the use of National Welfare Fund (NWF) to cover shortfalls in oil and gas revenues and accumulation of extra oil and gas revenues in the NWF when prices are high in line with the fiscal rule ensures that the budget system is resilient to fluctuations in oil and gas revenues.

Spending rose 14% year-on-year to 17.341 trillion rubles in the seven months after growing by 19% in the first half and 27% in January-May. Based on the previously reported spending figure of 14.976 trillion rubles for the first half, spending totaled 2.365 trillion rubles in July.

The ministry said the monthly dynamic of expenditure execution reached a normal level following accelerated financing of certain contract expenses in January-February.