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Federal budget returned to the red in April

 
20.05.2013

In April, the monthly federal budget printed a deficit of 0.3% of GDP (RUB 13bn), returning again to the red after one month of surplus, according to the Ministry of Finance. Revenues and expenditures were at RUB 1.12tn (+2.3% YoY) and RUB 1.13tn (+5.4% YoY), respectively.

Non oil and gas revenues decreased 10.6% MoM and were up a mere 0.3% YoY in March to RUB 534bn, while oil and gas revenues jumped 10.8% MoM and 4.3% YoY to RUB 584bn.

MinFin’s outstanding deposits in the banking system added RUB 144bn for the month. The overall balance of MinFin’s accounts with the CBR added RUB 222bn last month mainly on positive net domestic borrowings and FX revaluation.

Despite the decrease in RUB-denominated Urals oil prices in March and April, oil & gas revenues added significantly, consequently implying higher export volumes of hydrocarbons (largely due to the colder spring in Europe). While oil & gas revenues reached the second highest level ever, growth in non oil & gas revenues slid to almost zero, which points to an overall sluggish economy.

On the expenditures front, the Ministry is continuing to execute the budget more evenly, with around RUB 1.1bn monthly expenditures. In April, the growth in fiscal spending remained near 5% YoY as in 1Q13 on average, decelerating from almost 37% YoY in 1Q12 and 14% YoY in April 2012. Hence, a tighter fiscal policy poses visible hurdles for growth this year, in our view.

Meanwhile, despite the monthly positive balance of domestic borrowing (i.e. the volume of new bond issuance was higher than the redemption of bonds), the total federal budget execution in April was modestly supportive for liquidity given: i) the fiscal budget deficit (RUB 13bn) and ii) the ministry increased the volume of funds placed on banks’ deposits (+RUB 144bn).

Under our base case scenario (average Urals at USD 104/bbl), we expect the FY13 federal budget deficit at 0.5% of GDP.

Dmitri Fedotkin, Mykyta Mykhaylychenko, Maxim Oreshkin, Daria Isakova
VTB Capital analyst

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