In May, the monthly federal budget printed a surplus of 2.5% of GDP (RUB 135bn), expanding from 1.1% in April (revised up from a previously published deficit of 0.3% of GDP), according to the Ministry of Finance. Revenues and expenditures declined greatly YoY to RUB 890bn (-13.1% YoY) and RUB 755bn (-10.2% YoY), respectively. Oil & gas revenues were down 10.2% YoY (to RUB 524bn), with the pace of the contraction in non oil & gas revenues reaching 17.0% YoY (RUB 366bn).
MinFin’s outstanding deposits in the banking system decreased RUB 25bn for the month. The overall balance of MinFin’s accounts with the CBR added RUB 138bn last month.
May’s budget statistics were significantly impacted by the unfavourable calendar factor (May had three working days less than it did in 2012). However, this factor alone cannot explain the more than 10% annual decline in revenues (and, especially, the 17% in the non oil & gas part), confirming the weak economy dynamics. The sharp 12% YoY decline in car sales, double-digit decline in the import of investment goods and weak budget data all underpin our idea that the economic report for May is likely to be much worse than in April, showing negative readings for IP and investments coupled with a visible slowdown in retail sales growth.
From the liquidity perspective, the combined effect of federal government operations was visibly negative: the monthly positive balance of domestic borrowing (the volume of new bond issuance was RUB 37.7bn higher than the redemption of bonds), federal budget surplus (RUB 135bn) as well as the decrease in the volume of funds placed on banks’ deposits (-RUB 25bn). As a result, the banking system was forced to use FX swap with the CBR as a refinancing instrument.