In March, the monthly federal budget printed a surplus of 0.5% of GDP (RUB 141bn), following three consecutive months of deficits, according to the Ministry of Finance. Revenues and expenditures were at RUB 1.12tn (+2.0% YoY) and RUB 1.09tn (+6.8% YoY), respectively. February’s deficit was revised to 3.1% of GDP (from 4.9% of GDP previously).
Non oil and gas revenues increased by more than a half MoM, recovering (as usual) from the seasonally lower level in February to RUB 593bn (and up 4.2% YoY), while oil and gas revenues edged up 3.2% MoM to RUB 527bn (but dropped 0.4% YoY). MinFin’s outstanding deposits in the banking system expanded RUB 126bn for the month. The overall balance of MinFin’s accounts with the CBR was almost flat last month.
The surplus in March was quite expected as non oil&gas revenues usually bounce back after the traditional MoM decline in February, while the RUB denominated Urals price (-7.9% YoY) implied slightly softer oil and gas revenues than a year ago.
On the expenditures front, the Ministry is following its path of executing the budget more evenly, with around RUB 1.1bn monthly expenditures. In 1Q13, the growth in fiscal spending decelerated to 5% YoY (vs. almost 37% YoY in 1Q12 and 8% YoY in 4Q12). Hence, tighter fiscal policy poses visible hurdles for growth this year, in our view.
Meanwhile, despite the monthly fiscal surplus, the total federal budget execution in March was modestly supportive for liquidity: i) net domestic borrowing was negative (-RUB 48.5bn) and ii) the ministry increased the volume of funds placed on banks’ deposits (+RUB 126bn).
Under our base case scenario (average Urals at USD 104/bbl), we expect the FY13 federal budget deficit at 0.5% of GDP.