According to the MinFin, the federal budget surplus totalled RUB 120bn, or 0.5% of GDP, in January-May 2012. The monthly budget surplus increased to 3.6% of GDP (RUB 171bn) in May from the revised upward 0.4% of GDP (RUB 19bn) surplus in April. Monthly revenues increased 19.0% YoY (down 6% MoM, with oil monthly revenues increasing 4% MoM thanks to weaker RUB). Monthly expenditures surged 34% YoY in May, but edged down 21% MoM. MinFin’s outstanding deposits in the banking system amounted to zero at the end of May, down RUB 561bn since the beginning of the year and RUB 39.7bn since 1 May. The balance of MinFin’s accounts with the CBR increased RUB 503bn during the firth month of this year, mainly due to FX revaluation.
Although 5mo12 federal budget expenditures constitute 39% of the planned volume (vs. 36% in 5mo11), we believe it looks unfavourable that last month’s outlays declined 21% MoM, bringing the monthly balance to the highest surplus this year (3.6% of GDP). The recent oil price decline will, in our opinion, have little impact on oil revenues, as the slide in oil prices was to a large extent offset by higher USD/RUB.
Hence, we estimate that the overall effect of MinFin’s operations on liquidity was a markedly negative RUB 254bn in May, mainly because: the budget was in surplus (RUB 171bn), its deposits in the banking system decreased (RUB 40bn), and net domestic borrowings increased (RUB 39bn). We believe this could partly explain the money market rate increase in May, as the CBR only started selling FX on the local market as of 28 May (and May’s total selling was at a marginal RUB 5bn). However, this year we are facing smoother budget fund spending throughout the year, which means lower surpluses in the beginning of the year and, eventually, lower deficits during last months of the year.