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Federal budget 2014-16


Yesterday, the government panel on the budget discussed the federal budget for 2014-16 and underlying economic forecasts. The highlights are as follows.

MinFin decided that state-owned companies are to pay 35% of IFRS net income in dividends from 2016 (meaning an extra RUB 106bn for the budget).

Oil tax manoeuvre: lower export duties and higher MET (this would release RUB 174bn on a net basis).

Public debt is to increase from 12% of GDP (RUB 8.1tn) in 2013 to 14.3% of GDP (RUB 12.4tn) the end of 2016 (to recap, MinFin named 15% of GDP as the threshold for the state debt burden).

The Reserve Fund is to edge up from RUB 2.6tn (3.9% of GDP), which is much lower than the RUB 3.2tn (4.8%) planned in the budget law, to RUB 3.7tn (4.3%).

Budget revenues in the non-oil and gas part were cut considerably.

Expenditures in 2014-16 were reduced 1.6% from those in the budget law, and now the planned volume of spending implies only 4.4% YoY growth in 2014 (vs. 6.1% YoY in the budget law).

Budget spending for 2014-16 is to be reallocated: lower for the military but higher for the national economy and health.

This year’s budget was adjusted slightly as concerns revenues: a higher oil and gas item (+RUB 527bn) and lower non-oil and gas (-RUB 494bn).

As ministers are due to finalise the draft 2014-16 federal budget at today's government meeting, we prefer to wait for that version to be released before drawing any conclusions.
Daria Isakova
VTB Capital analyst

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