The Ministry of Finance has published draft amendments to the Federal Law on the 2012-14 budget. The key takeaway is the virtually zero deficit in 2012 (-0.1% of GDP), mainly due to the 7.6% increase in total revenues (to RUB 12,678bn). In addition, expenditures are expected to add a marginal RUB 89bn to RUB 12,745bn, and nominal GDP is to be 3.2% higher at RUB 60,590bn.
The proposed amendment to expenditures is even below the RUB 108bn announced by Prime Minister Vladimir Putin and Minister of Finance Anton Siluanov. The contained increase in expenditures is in line with our view that higher oil will not trigger a similar revision to expenditures.
An almost balanced budget is consistent with an oil price of USD 115/bbl for this year. We see it at 1.5% of GDP at the end of the year, given a more conservative oil forecast at USD 100/bbl.