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Siluanov is pushing for better tax collection

Yesterday, the Minister of Finance Anton Siluanov expressed his concern over non-oil & gas revenues as the situation of tax collection is tough. In particular, one of the key reasons for the lower than expected non-oil and gas revenues received this year is the undervalued estimations of VAT refunds (many public companies finished investment projects and launched the VAT repayment return process).

Along with higher than planned volumes of VAT refund claims, we see the low economic growth pace coupled with decelerated inflation (and thereby nominal GDP growth) this year as a challenge for the planned non-oil & gas revenues. The lack of additional non-oil & gas revenues is set to limit the government’s ability to increase spending this year. Hence, fiscal policy will likely remain tight this year and we therefore expect to see negative real growth of federal government expenditures, especially in the second half of the year.

Moreover, non-oil & gas revenues are usually lower in February and we therefore think this month’s budget balance will print a deficit of around 2.5% of GDP (vs. 1.8% of GDP deficit in January), as we expect a modestly higher RUB oil price during the second month of 2013 and the tendency to execute the budget more evenly continues. 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

oil, gas, GDP, ruble

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