The RF Budget for January-September 2010

For 9 months 2010 the Federal budget revenues amounted to 18.4% GDP which is 0.2 points of GDP higher against the same period of 2009. Federal budget revenues growth for this period were attributed to the following: increased proceeds obtained from the fuel and energy complex resulting from relatively favorable market prices and demand on goods of Russian export as well as growing volume of hydrocarbons extraction  and improved economic environment. Among factors which slowed down revenues growth are the following: replacement of unified social tax with insurance contributions as well as fall of investment revenues from the use of funds by oil and gas foundations.

Federal budget expenditures for 9 months 2010 fell by 2.2 point of GDP against the level for the same period last year. Their nominal growth amounted to about 300 bln Rb. Cash execution of the Federal budget for 9 months of the current year came to about 66% of the annual budget financing targets for 2010 and only insignificantly exceeded the rate of cash budget execution for the same period 2009.

In October 2010 regular amendments were introduced in the Federal Law on 2010 Federal Budget. As a result of adjustments in the main macroeconomic indicators the volume of expenses for public debt service went down by 60 bn Rb. Furthermore, as a result of improvements obtained in other types of expenditures, about 130 bn Rb are subject to redistribution. Among the recipients and areas of additional financing the document notes the Ministry of Defence (12 bn Rb), housing and community amenities reform (25 bn Rb), state corporation “Rostekhnologii” (about 14 bn Rb). Highest additional public investment will be directed to increase statutory capital of OAO “RZhD” (40 bn Rb)¹.

For 9 months 2010 the Federal budget deficit came to 2.2% GDP against 4.7% GDP in 2009. However, the volume of oil and gas deficit, according to preliminary data, went down merely by 1.2 points of GDP against last year parameters and constituted 10.6% GDP. To recap its volume according to World Bank recommendations should not exceed 5% GDP. Such considerable volume of oil and gas deficit keeps reminding of undertaken public obligations not ensured by non oil and gas budget revenues.

The Reserve Fund remains the main source of financing the Federal budget deficit: its volume for 9 months fell by 572 bn Rb to 1,258.3 bn Rb. Nevertheless, contrary to many projections stating its depletion by the end of 2010 this won’t happen due to a reduction in the anticipated volume of the Federal budget deficit. Part of the Reserve Fund will be saved and directed to cover 2011 budget deficit. In addition to the Reserve Fund, financing of the Federal budget deficit in 2011–2013 will be executed at the expense of public debt and proceeds from federal property privatization. It is perceived that the privatization program will boost the coffers by 900 bn Rb over 3 years.

I.A. Sokolov – PhD, Head of Budget Policy Lab
 
¹ http://www.kommersant.ru/doc.aspx?DocsID=1516422