Less is better, but better: budget deficit is decreasing in Russia
The federal budget deficit, according to the preliminary estimate of the Ministry of Finance, amounted to 2.17 trillion rubles in the first quarter of 2025. This is 1.88 trillion rubles lower than in the same period of 2024. What is the reason for the reduction of the deficit, how the budget policy has changed and what are the prospects for the end of the year — in the material of Izvestia.
Slowing cost growth
According to the preliminary estimate of the Ministry of Finance, the volume of federal budget revenues in the first quarter of 2025 amounted to 9,050 billion rubles, which is 3.8% higher than the volume of revenue in the first quarter of 2024. According to the results of the reporting period, the volume of federal budget expenditures increased by 24.5% and amounted to 11.22 trillion rubles.
As explained in the ministry, the current level of budget deficit is mainly due to the advanced financing of expenditures in January 2025 and will not affect the fulfillment of the target parameters of the structural balance for 2025 as a whole.
At the same time, in March of this year, the federal budget was in surplus, the Ministry of Finance stated.
Analysts attribute the slowdown in spending growth (the lion's share of which occurred at the beginning of the year due to the advanced advance of government spending in January-February) to positive factors.
— In March, spending growth slowed by 11.2% year-on-year (3179 billion rubles) After the extreme growth rates at the beginning of the year and month-on-month, the budget was in surplus, which eventually had a positive impact on the final result of the first quarter. This is despite the fact that in January—February, the Russian federal budget was executed with a deficit of 3,841 billion rubles," says Olga Veretennikova, vice president of the Borsell analytical company.
— Russia does not live in debt. The budget deficit is now only 1% of GDP, while the first month of spring has become a surplus. The total amount of tax revenue in the country's budget continues to grow steadily," said Andrei Loboda, Economist and Communications Director at BitRiver.
Non-oil and gas revenues
According to the results of the first quarter of 2025, non-oil and gas revenues of the Russian budget increased by 10.6% compared to the same period last year, to 6.4 trillion rubles. According to the Ministry of Finance, this is slightly higher than the planned level, which forms a stable base for further faster income growth.
The increase in non-oil and gas revenues is due to an increase in turnover tax receipts (including VAT), which amounted to 9.4% in the first quarter compared to the first quarter of last year.
— Continued high inflation contributes to the growth of such deductions as business activity, as well as the introduction of new fees and an increase in current rates. In particular, the estimated budget revenues from the tax reform, which was carried out last year and became effective on January 1 this year, amount to 2.6 trillion rubles," explains Arthur Meinhard, head of the Global Markets Analytical Department at Fontvielle.
The main contribution to the growth of non-resource revenues was made by such industries as manufacturing (increased production in mechanical engineering, chemical industry and metallurgy, stimulated by import substitution and government support), agriculture (increased exports of grain, meat and dairy products, as well as increased domestic demand), the IT sector and services (expansion of digital services, telecommunications and IT exports, including software and outsourcing), notes Olga Veretennikova.
Oil and gas revenues
Oil and gas budget revenues for the first quarter decreased by 9.8%, to 2.64 trillion rubles, mainly due to a one-time receipt of an additional payment for mineral extraction tax on oil in February 2024, as well as a decrease in the average oil price, the Finance Ministry said.
The budget for 2025 is adjusted taking into account the average export oil price of $ 69.7 per barrel and the value of the ruble against the dollar at 96.5.
However, the beginning of the year is characterized by a significant strengthening of the national currency and a storm in the commodity markets against the background of a possible tariff war between major geopolitical players and increased production by the OPEC+ cartel countries. All this creates pressure on the state's oil and gas revenues, which depend on these two parameters, explains Arthur Meinhard.
As recognized by the Ministry of Finance, the risk of a decrease in oil and gas revenues due to falling prices remains.
In addition to tariff wars, oil is also under pressure from a slowdown in global demand, the transition of the EU and Asia to renewable energy sources, as well as increased production in the United States and OPEC+ countries.
In addition, sanctions pressure continues in the form of restrictions on the export of Russian energy resources and logistical difficulties regarding transportation to Asia. Secondary sanctions from the United States may also have a negative impact on the dynamics of Russia's oil and gas revenues, adds Olga Veretennikova.
The airbag
Nevertheless, as the Ministry of Finance recalled, the budget rule in force in Russia ensures the stability of the budget system to fluctuations in oil and gas revenues. According to it, during periods of favorable price conditions, additional oil and gas revenues flow to the National Welfare Fund (NWF). In unfavorable periods, NWF funds are spent, if necessary, to cover lost oil and gas revenues.
— Non-oil and gas companies remain stable and support the Russian budget. In addition, we should not forget about the "financial cushion" of safety in the form of NWF, which was created in case of a storm in the commodity market. As of March 1, 2025, the liquid part of the Fund is at 3.4 trillion rubles," Andrei Loboda points out.
Budget policy
Experts draw attention to the fact that changes in budget policy contribute to reducing the deficit: the emphasis is shifting to national projects: defense, technology, education, and healthcare. Plus, control over the regions is being tightened through requirements for the subjects of the Russian Federation to reduce the debt burden and increase cost efficiency.
— In addition, private investment is being stimulated in the form of benefits for companies involved in import substitution and export of non-primary goods. The positive dynamics of the budget deficit has a restraining effect on inflation: reducing the deficit reduces pressure on the money supply and limits the rate of inflation, Olga Veretennikova emphasizes.
What's next
So far, expenses are 2.2% higher than the annual plan at the level of 41470 billion rubles, while revenues, on the contrary, are 8% lower than the plan. Experts do not rule out anything critical, but a negative scenario.
— Against the background of relatively cheap oil, rising government spending and a stronger ruble, Russia's budget deficit could reach 3% of GDP by the end of this year. At the same time, it is important that inflation does not flare up against the background of the expected start of the key rate cycle in the second half of the year, warns Andrei Loboda.
On the other hand, the analyst emphasizes, the total amount of tax revenues to the country's budget continues to grow steadily. Therefore, with a high probability of easing monetary policy and a balanced market environment in the global geo-economy, the country's budget may soon become surplus.
Переведено сервисом «Яндекс Переводчик»
