Russia Sees 1 Trillion-Ruble Shortfall in 2013 as Deficits Loom
Russia risks a revenue shortfall of more than 1 percent of economic output as proceeds from state asset sales and tax collection lag behind government plans, according to Finance Minister Anton Siluanov.
Budget (RUBUCFBA) income may miss this year’s 12.9 trillion-ruble target by as much as a “scary” 1 trillion rubles ($30 billion), Siluanov said at a government meeting in Moscow today. Tapping the $84.7 billion Reserve Fund, one of the country’s two sovereign wealth funds, to cover budget holes isn’t ruled out, according to Siluanov.
“We aren’t optimistic about budget execution this year,” he said. “There are questions about value-added tax collection, there are questions about profit tax collection and proceeds from privatization as sources of financing for the deficit.”
The world’s biggest energy exporter faces a period of entrenched deficits through at least 2016, the Finance Ministry projects, as a deteriorating economic outlook complicates plans to balance public finances a year earlier and social spending keeps the budget in the red. The government will raise a third less than previously estimated from asset sales in the next three years as companies including pipeline operator OAO Transneft pushed to retain state support and market turbulence held up offerings.
Russia gathers surplus revenue from oil and natural gas sales in the rainy-day Reserve Fund until it reaches 7 percent of gross domestic product, a level that won’t be achieved before 2019, according to Siluanov.
Russia’s budget swung to a 128.4 billion-ruble surplus in the year through May, equal to 0.5 percent of gross domestic product, the Finance Ministry said June 14. Revenue reached 5.1 trillion rubles in the first five months, or 39.8 percent of the government’s target for 2013, while spending was 5 trillion rubles, or 37.2 percent of the goal.
The fiscal gap will probably be 0.6 percent of GDP this year, Siluanov said May 22. The Finance Ministry projects the deficit at 0.4 percent in 2014, 0.56 percent in 2015 and 0.6 percent in 2016.
The revenue shortfall will put a further strain on public finances as the government seeks to keep annual pension increases above the level of inflation. After planned adjustments on Jan. 1 and April 1, pensions will be raised a cumulative 9 percent next year, Labor Minister Maxim Topilin told reporters today. The average pension will reach 11,144 rubles next year and more than 13,200 rubles in 2016, according to Topilin.
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