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Federal budget prints 1.1% of GDP surplus in November

 
13.12.2012
According to the Ministry of Finance, the federal budget surplus totalled RUB 789bn, or 1.4% of GDP, in 11mo12. The monthly budget surplus increased to 1.1% of GDP (RUB 65bn) in November, from 0.9% of GDP in October. Monthly revenues were up a modest 3.1% YoY (down 10.7% MoM), on the back of non-oil and gas revenues, which declined 3.5% YoY and 27.1% MoM. Meanwhile, the growth in monthly expenditures dropped into the red, at -9.1% YoY and -12.5% MoM. The balance of MinFin’s accounts with the CBR increased RUB 111bn in November 2012.

In November, federal budget expenditures declined YoY following their strong growth in 10mo12 of around 28% YoY. We are reiterating our concern that decelerating public spending will eat into the economy’s growth in the near term. Given MinFin’s announced estimate of a 0.1-0.2% of GDP surplus this year (vs. a deficit of 0.07% of GDP stated in law with recent amendments), MinFin will spend up to RUB 2.1tn this month, thereby pulling December’s federal budget balance down to a significant deficit of 12% of GDP (or near RUB700bn), modestly relaxing the current liquidity tensions (this is usual practice).

Interestingly, MinFin stated that its outstanding deposits in banks increased RUB 1,202bn in November, which is a misprint. According to our calculations, based on data published on the CBR’s website, MinFin’s net placement of budgetary funds to banking deposits stood at -RUB 31.9bn, bringing the outstanding balance down to RUB 577bn as of the end of November.

According to the CBR’s daily data on changes in the consolidated budget account, the overall effect of MinFin’s operations on liquidity was negative last month (-RUB 206bn). In more detail, the federal budget surplus, net domestic borrowings, and MinFin's deposits net balance cut liquidity by RUB 65bn, RUB 45bn, and RUB 32bn respectively during the reported period. 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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