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Federal budget was almost balanced in July

According to MinFin, the federal budget surplus totalled RUB 283bn, or 0.9% of GDP, in 7mo12. The monthly budget was almost balanced, at 0.2% of GDP (RUB 12bn) in July, staying in positive territory for the whole year with the exception of February when the budget printed a deficit of 5.2% GDP. Monthly revenues increased 12.9% YoY (down 6.2% MoM) last month. Monthly expenditures added 18.4% YoY in July, edging up a slight 3.4% MoM. MinFin’s net placement of budget funds on deposits in banks was positive in July for the second consecutive month (at RUB 53.1bn, up from RUB 14bn in June). The balance of MinFin’s accounts with the CBR decreased RUB 132bn in July, mainly due to FX revaluation.

MinFin has been sticking to a line of regular budget execution (around RUB 1tn each month), bringing the monthly budget balances close to zero. Thus, in spite of the still high growth in fiscal outlays in YoY terms, we see significantly lower YoY growth in expenditures during the coming months, which would have a negative impact on economic growth.

We estimate that the overall effect of MinFin’s operations on liquidity was positive, at around RUB 105bn in July, mainly because net domestic borrowings decreased (RUB 74bn) and the ministry started depositing budget resources in the banking system (its net placement was some RUB 53bn in July), while the budget surplus slightly shaved volumes of provided liquidity (RUB 12bn).

Hence, MinFin’s operations contributed to improving local liquidity conditions in July, in tandem with the CBR (the outstanding debt of banks to the CBR exceeded RUB 2tn in mid-July). 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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