The monthly federal budget deficit reached RUB 244bn, or 4.9% of GDP, in February 2013, according to the Ministry of Finance. Revenues and expenditures were at RUB 0.9tn (+10.0% YoY) and RUB 1.1tn (+9.4% YoY), respectively. January’s deficit was revised to 0.3% of GDP (from 1.8% of GDP previously).
Non oil and gas revenues decreased 40% from January to RUB 376bn (but were up 17% YoY), while oil and gas revenues picked up 9.7% MoM to RUB 511bn (+5.2% YoY). MinFin’s outstanding deposits in the banking system declined RUB 51bn for the month to RUB 30bn at the end of February. The overall balance of MinFin’s accounts with the CBR decreased RUB 253bn last month.
The substantial monthly deficit in February was quite expected as non oil&gas revenues are usually 30-40% lower in comparison with the previous month. Besides, recently officials from MinFin have voiced concerns over higher VAT refunds than planned. On YoY basis non oil&gas revenues look quite well. At the same time, oil&gas revenues even edged up owning to a moderate increase in RUB denominated Urals price (RUB 3,468/bbl from RUB 3,375/bbl).
On the expenditures front, the Ministry is following its path of executing the budget more evenly, with expenditures in the first half of the year being greater than in 2012, while those in the second half are lower. Hence, although at the beginning of this year fiscal spending looks modestly supportive for growth, during 2H13 Russia’s economy is likely to face a negative impact from the much tighter fiscal policy.
Meanwhile, we note that February’s deficit was mainly financed by MinFin’s accounts in the CBR, as the balance of net domestic borrowings was negative (-RUB 55bn).
Under our base case scenario (average Urals at USD 104/bbl), we expect the FY13 federal budget deficit at 0.5% of GDP.