During the first quarter of this year, Russia’s budget recorded a deficit of more than $29 billion, with oil and gas revenues declining.
Data from the Ministry of Finance showed that Russia’s federal budget deficit, during the first quarter of 2023, amounted to about 2.4 trillion rubles ($29.52 billion).
The data, seen by the specialized energy platform, indicated that Russia’s budget deficit shrank by 180 billion rubles ($2.21 billion) compared to preliminary data for the end of February, according to the Russian agency Interfax.
The Russian Ministry of Finance expected that the planned deficit for the current year would be about 2.9 trillion rubles ($35.67 billion).
Russia’s budget revenue
The Ministry of Finance said that budget revenues for the first quarter of 2023 amounted to about 5.677 trillion rubles ($69.83 billion), down 21% compared to the same period last year due to lower oil and gas revenues.
The ministry did not release separate figures for March, indicating a cumulative total for the quarter; As revenues in the period from January to February amounted to an estimated 3.163 trillion rubles ($38.91 billion), and on this basis, revenues were 2.51 trillion rubles in March ($30.87 billion).
Russia’s budget for 2023 projects a deficit of 2% of GDP; The Finance Ministry budgeted for a 23% cut in oil and gas revenues this year to 8.95 trillion rubles ($110.09 billion).
The revenues of the Russian energy sector recorded, during 2022, about 11.6 trillion rubles ($140 billion), an increase of 27.9%, compared to 9.1 trillion rubles ($112 billion) in 2021.
Russian oil and gas revenues
Russia’s budget revenues from oil and gas fell 43% year-on-year in March, and a quarterly profit tax supported all revenues from recording a monthly decline.
Moscow relies on oil and gas revenues to finance government spending; Over the past year, it amounted to about 11.6 trillion rubles ($142.68 billion), and it was forced to sell foreign reserves to cover the deficit that was burdened by the cost of its military operation in Ukraine.
Russia’s budget income from oil and gas sales amounted to 688.2 billion rubles ($8.46 billion) last month, compared to 521.2 billion rubles ($6.41 billion) in February and 1.21 trillion rubles ($14.88 billion) in March 2022. According to data from the Ministry of Finance.
In March, Russia’s oil and gas revenues increased month-on-month, thanks to 220.6 billion rubles ($2.71 billion) in quarterly payments of a profit-based tax on hydrocarbon extraction.
The extraction tax on oil was 63.6 billion rubles ($0.78 billion) lower in March than in February, while the mineral extraction tax on natural gas was 12.9 billion rubles ($0.16 billion) lower.
Tax and customs revenues from energy sales have gradually recovered since January, when they reached their lowest level since August 2020 in light of the impact of Western sanctions on Russia’s exports over the conflict in Ukraine.
The Ministry of Finance gave a theoretical price of $47.85 per barrel for Russian Urals crude in March, which is lower than the February price of $49.56, and much lower than the March 2022 price of $88.95.
spending in Russia
The Finance Ministry said spending growth slowed to 4.2% in March, after jumping nearly 50% in February, as a result of an acceleration in spending early in the year.
Bloomberg estimates showed that the increase in Russia’s expenditures at the beginning of the year was mainly driven by the costs of the war.
The data showed that the fiscal deficit fell to 2.4 trillion rubles ($29.4 billion) at the end of March from 2.58 trillion rubles ($31.73 billion) in the first two months of the year.
The deficit is compared to a surplus of 1.1 trillion rubles ($13.53 billion) in the first quarter of 2022, in an indication of the impact on the Ukrainian war budget. Oil and gas income decreased by 45% during the first quarter compared to 2022.
The European Union has moved away from Russian energy supplies and the Group of Seven imposed a ceiling on the prices of oil sales in Moscow.
Experts predicted that Russia’s budget deficit would be more than the government’s planned 2% of GDP, but it is unlikely to reach more than 3% in 2023.
Oil and gas revenues will recover in the coming months on the back of a weaker ruble and government pressure to reduce the rebate for Urals crude against Brent, which producers use when calculating their taxes.
Leave a Reply