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Budget of the Russian Federation

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Last updated: August 10, 2017


Country Budget in Brief

Federal Budget Developments in 2011-2015

Federal Budget Developments in 2016

Federal Budget Developments in 2017

Medium-Term Budgetary Projections

Long-Term Budgetary Projections




Country Budget in Brief




Dynamics of the Russian Federal Budget Revenues, Outlays and Deficit / Surplus in 2014-2019


Sources: Ministry of Finance of Russia, Accounts Chamber of the Russian Federation, the State Duma of the Russian Federation (2017-2019 data are projections under the federal law “On the Federal Budget for 2017 and the Planning Period of 2018 and 2019”).


Dynamics of the Russian Federal Budget Deficit (-) / Surplus (+), % to GDP


Sources: Ministry of Finance of Russia, Accounts Chamber of the Russian Federation, the State Duma of the Russian Federation (2017-2019 data are projections under the federal law “On the Federal Budget for 2017 and the Planning Period of 2018 and 2019”), data for 2016 recalculated based on 2nd GDP estimate for 2016.



Federal Budget Developments in 2011-2015



The available historical yearly, quarterly and monthly data on the Russian federal budget execution are presented in Datasheet section.

In 2011-2015 the Russian federal budget came through gradual shift from positive balance (+0.7% of GDP in 2011) to budget deficit (-2.4% of GDP in 2015). That shift reflects the structural problems of the Russian economy with falling GDP growth rates and extremely high share of oil and gas revenues in total budgetary revenues coupled with deteriorating fundamental factors like dramatic slump in the crude oil prices and the country’s engagement in geopolitical conflicts in 2014-2015.


Revenues, Outlays and Deficit/Surplus of the Federal Budget in 2011-2015


Source: Ministry of Finance of Russia.


Dynamics of Federal Budget Deficit (-) / Surplus (+) in 2011-2015, % to GDP


Source: Calculations of factosphere.com based on data of the Russian Ministry of Finance and the Russian State Statistics Service (cumulative by the year end).

The share of revenues from the oil and gas sector in total revenues of the federal budget has been around the impressive level of 50% in 2011-2014, but in the conditions of rapidly falling crude oil prices, it started to deteriorate with the registered decrease to about 43% in 2015.


Revenues from Oil and Gas Sector in Total Revenues of the Federal Budget in 2011-2015


Source: Ministry of Finance of Russia.

The key planned budgetary indicators are approved by the federal laws on the federal budget for appropriate upcoming years, and in 2011-2015 the budget execution was quite close to those approved indicators.


Factual Federal Budget Revenues / Outlays to Planned Revenues / Outlays in 2011-2015


Source: Calculations of factosphere.com based on data of the Russian Ministry of Finance and projected indicators stated in corresponding laws on the federal budget (after all amendments).

Following the slump in crude oil prices and overall deterioration of the Russian economy’s performance, the year 2015 became the year of substantial budgetary deficit growth (from 0.4 to 2.4% of GDP) with the deficit rapidly increasing closer to the year end.


Quarterly Revenues, Outlays and Deficit/Surplus of the Federal Budget in 2015 (Budget Execution, Cumulative by the Year End)


Source: Ministry of Finance of Russia.



Federal Budget Developments in 2016



The available historical yearly, quarterly and monthly data on the Russian federal budget execution are presented in Datasheet section.

The initial official budgetary projections for the year were indicated in the federal law #359-FZ “On the Federal Budget for 2016” dated December 14, 2015[1] and assumed 3.00% budgetary deficit. The key assumptions were +0.7% GDP growth, inflation at +6.4%, RUR/USD rate at 63.3 and the average annual Urals crude oil price at USD 50 per barrel.

However, in the beginning of 2016 the situation at the crude oil market continued to deteriorate with the crude oil price falling below USD 30 per barrel and the Russian budgetary gap expanding further. April and May were the worst months in terms of accumulated budgetary deficit (-4.5% and -4.4% to GDP, correspondingly), while the situation started to improve afterwards in line with the crude oil price recovery. Specifically, the average monthly Brent crude oil price increased from USD 34.73 per barrel in January 2016 to USD 56.14 per barrel in December 2016.


Monthly Dynamics of the Federal Budget Deficit (-) / Surplus (+) in 2016, % of GDP


Source: Calculations of factosphere.com based on data of the Russian Ministry of Finance (monthly GDP estimates and data on the federal budget balance).

In the first half of the year the state made a number of steps following the policy of the budgetary consolidation (specifically, freezing the level of salaries of the state employees, reduced indexation of pensions and decrease in selected budgetary outlays). Coupled with the recovery and stabilisation of the crude oil price, this allowed to retain the budgetary deficit below 4% in 2016.

As a result of changing economic situation, the Russian Government decided to correct the federal budget for 2016 in the 2nd half of the year (the amended law “On the Federal Budget for 2016” dated November 22, 2017[2]). The amendments indicated the planned budgetary deficit at 3.66% and assumed 0.6% GDP contraction, CPI growth at 5.8%, the average RUR/USD rate at 67.5 and the average annual Urals crude oil price at USD 41 per barrel.

Official Budgetary Projections vs. Execution of the Federal Budget in 2016

-2016 planned(14.12.2015) 2016 planned(amendments made on 22.11.2016)2016factual
Budgetary revenues, RUR billion13 738.513 368.613 460
Budgetary revenues, % of GDP17.49%16.14%15.64%
Budgetary outlays, RUR billion16 098.716 403.016 416
Budgetary outlays, % of GDP20.49%19.81%19.08%
Federal budget balance, RUR billion-2 360.2-3 034.4-2 956
Federal budget balance, % of GDP-3.00%-3.66%-3.44%
Assumptions---
Nominal GDP, RUR billion78 57382 81586 043.6*
GDP growth, %+0.7%-0.6%-0.2%
CPI growth (December to December), %6.4%5.8%5.4%
RUR / USD rate63.367.566.9
Urals crude oil price, USD per barrel504141.7

* Second GDP estimate for 2016.

Source: the State Duma of the Russian Federation (projections under the law “On the Federal Budget for 2016” dated December 14, 2016[3], projections under the amended law “On the Federal Budget for 2016”[4]), the Russian Ministry of Finance (data on the federal budget execution), calculations by Factosphere.

According to factual data on the federal budget execution in 2016, the federal budget deficit was registered at 3.44% slightly outperforming the projections primarily due to the revised estimates of GDP dynamics (from 0.6% contraction to 0.2% contraction).


Revenues, Outlays and Deficit / Surplus of the Russian Federal Budget in 2014-2016 (Budget Execution)


Source: Ministry of Finance of Russia.


Dynamics of Federal budget deficit (-) / surplus (+) in 2014-2016, % of GDP


Source: Ministry of Finance of Russia, data for 2016 recalculated based on 2nd GDP estimate for 2016.

The quarterly budgetary dynamics showed positive developments in 2nd half of 2016 with a typical surge of outlays registered in 4Q 2016.


Quarterly Revenues, Outlays and Deficit/Surplus of the Federal Budget in 2016 (Budget Execution, Cumulative by the Year End)


Source: Ministry of Finance of Russia.


Quarterly Dynamics of the Federal Budget Deficit (-) / Surplus (+) in 2014-2016, % of GDP


Source: Calculations of factosphere.com based on data of the Russian Ministry of Finance (quarterly GDP estimates and data on the federal budget balance).



Federal Budget Developments in 2017



The available historical yearly, quarterly and monthly data on the Russian federal budget execution are presented in Datasheet section.

In 2017 the Russian federal budget balance is commonly projected to be negative, but the budgetary performance is assumed to be better as compared to 2016.

The budgetary deficit for the year was initially planned at 3.17% of GDP (September 2016 projections under the law “On the Federal Budget for 2017 and the Planning Period of 2018 and 2019” [5]) assuming the average annual Urals crude oil price at USD 40 per barrel and GDP growth at +0.6%.

However, the domestic economy developments registered in the beginning of the year were better than the expectations, while the average Urals crude oil price exceeded USD 50 per barrel for the first months of 2017. The results of the federal budget execution for the past months of 2017 showed that Russia may hope for much lower federal budget deficit as compared to initial projections.


Dynamics of the Federal Budget Deficit (-) / Surplus (+) in 2017, % to GDP


Source: Ministry of Finance of Russia (data on the federal budget execution, GDP estimates), calculations of Factosphere.

As a result, it was decided to correct the federal budget for 2017 amending the appropriate federal law. On May 26, 2017 the Russian Government delivered amendments to the Russian federal budget for 2017 to the State Duma for approval envisaging decrease in the federal budget deficit for the year to 2.1%.

Budgetary Projections for 2017 under the Federal Law on the Federal Budget

-2016factual2017planned (September 2016)2017 planned(May 2017 amendments)
Budgetary revenues, RUR billion13 46013487.614 678.9
Budgetary revenues, % of GDP15.64%15.54%15.9%
Budgetary outlays, RUR billion16 41616240.816 602.6
Budgetary outlays, % of GDP19.08%18.71%18.0%
Federal budget balance, RUR billion-2 956-2 753.2-1 923.8
Federal budget balance, % of GDP-3.44%-3.17%-2.1%
Assumptions---
Nominal GDP, RUR billion86 043.6*86 80692 190
GDP growth, %-0.2%0.6%2.0%
CPI growth (December to December), %5.4%4.03.8%
RUR / USD rate66.967.564.2
Urals crude oil price, USD per barrel41.740.045.6

*2nd GDP estimate for 2017 Source: the State Duma of the Russian Federation (explanatory note to draft of amendments to the federal budget for 2017[6], the federal law “On the Federal Budget for 2017 and the Planning Period of 2018 and 2018”[7]), the Russian Ministry of Finance (data on the federal budget execution in 2016[8]), calculations by Factosphere.



Medium-Term Budgetary Projections



Note: The full datasheet with available projections on the federal budget balance can be found here.

In the medium term the Russian budgetary performance will remain heavily dependent upon the crude oil price dynamics. Assuming stabilisation of the average annual Urals crude oil price in the range of USD 40-60 per barrel and quite moderate economy growth rates in the coming years, it will be a substantial challenge for the country to secure the federal budget surplus in the medium term (until the year 2020). That is confirmed by the budgetary projections of the state that have been elaborated in the course of the federal budget drafting for 2017-2019. The state planned to decrease the federal budget deficit at a rate of about 1% a year in the coming years by means of freezing outlays and increasing budgetary revenues. The current goal is to reach 1% budgetary deficit by 2019.

Budgetary Projections under the Law on the Federal Budget for 2017-2019

-2016factual*2017 planned(May 2017)2017planned(September 2016)2018planned(September 2016)2019planned(September 2016)
Budgetary revenues, RUR billion13 46014 678.913487.614028.514844.8
Budgetary revenues, % of GDP15.64%15.9%15.54%15.20%15.02%
Budgetary outlays, RUR billion16 41616 602.616240.816039.715987
Budgetary outlays, % of GDP19.08%18.0%18.71%17.38%16.17%
Federal budget balance, RUR billion-2 956-1 923.8-2 753.2-2 011.2-1 142.2
Federal budget balance, % of GDP-3.44%-2.1%-3.17%-2.18%-1.16%
Nominal GDP, RUR billion86 043.692 19086 80692 29698 860

*Provided for reference (data on the federal budget execution provided by the Russian Ministry of Finance[9]).Source: the State Duma of the Russian Federation (explanatory note to draft of amendments to the federal budget for 2017[10], the federal law “On the Federal Budget for 2017 and the Planning Period of 2018 and 2018”[11]), calculations by Factosphere.

The better-than-expected performance of the economy in the beginning of 2017 and the positive dynamics of the crude oil price supported by the deal with OPEC created ground for improving budgetary projections for the coming years with the chances to come to the zero balance already by 2019. However, there are high risk that the crude oil price will be experiencing increasing pressure created by additional supply from the side of the shale oil companies. Therefore, in the medium term the developments of the crude oil price have chances to approach the lower bound of the commonly accepted interval (USD 40-60 per barrel) with corresponding impact on the Russian budgetary performance. The budgetary stability under the crude oil price fluctuations is supposed to be secured by renewal of implementation of the budgetary rule starting from 2018.

The Russian budgetary rule assumes that the additional budgetary income received under the oil prices exceeding indicated level (presently USD 40 per barrel) is directed to the Russian sovereign funds. The major purpose of introduction of the budgetary rule is securing less vulnerability of the national economy to the crude oil price fluctuations. Beginning from 2016 the budgetary rule is not officially applied in Russia. However, starting from February 2017 the Russian Ministry of Finance engaged foreign currency interventions in order to implement it by means of buying foreign currency in the amount of calculated additional budgetary income when the Urals crude oil price is above the specified level (presently USD 40 per barrel) and selling it when the price falls below that level.

All in all, in case the fundamental factors (primarily, crude oil price dynamics) are more or less favourable and in case all means of budget consolidation are properly employed, Russia is capable of overcoming the federal budget deficit situation without extraordinary developments while serving external and domestic debt in a proper way.

There is still a question put by a number of the think tanks whether Russia shall eliminate the budgetary deficit as soon as possible. Specifically, Mr. Alexey Kudrin, the head of the Centre for Strategic Research and one of the key persons contributing to the development of the Russian strategy, commented that it would be reasonable to retain the budgetary deficit at 1.5% of GDP in the medium term.[12] In his opinion, that would allow maintaining the stable level of taxation for the business in the coming years.

Planned measures on the budgetary deficit coverage

When dealing with permanent budget deficit situation, the state plans to engage the following measures for the budget deficit coverage in the medium-run:

In case the external factors show negative developments (in the first place, the crude oil price) and the above-mentioned activities do not allow addressing the budgetary challenges properly, the increase in rates of the federal taxes like corporate tax, personal income tax, VAT and property tax may also be considered by the state (as of the mid-2016, there were proposals on this from the side of the Ministry of Finance[13]).



Long-Term Budgetary Projections



Without strong internal drivers of the national economy developments while retaining outstanding share of revenues from the oil and gas sector in total budgetary revenues, the well-being of the Russian budgetary system in the long-run is commonly considered to depend, to much extent, upon dynamics of the crude oil price. Assuming that price to be at relatively stable level in the coming decades (USD 40-60 per barrel) under the moderate GDP growth rates, the revenues of the Russian federal budget are not likely to increase dramatically in the long term.

In the course of preparation of the federal budget for 2017-2019 the Russian Government confirmed lacklustre budgetary prospects with available long-term projections not assuming dramatic changes in the Urals crude oil price in the coming decades while keeping quite moderate economy growth projections and indicating retaining budgetary deficit.

On October 28, 2016 the draft of long-term budgetary projections until the year 2034 prepared by the Russian Government was released among other documents comprising the package for consideration of the budget for 2017-2019 by the State Duma.[14] According to the projections, the Russian consolidated budget will be demonstrating permanent deficit in the coming 18 years that will be slowly decreasing to 0.7% to GDP by the year 2030.

Those projections look a bit outdated given the developments of the Russian economy and the crude oil price dynamics demonstrated in 2017, but still they give the general perception on the Russian budgetary prospects in the long-run.

Official Assumptions for the Long-Term Budgetary Projections as of October 28, 2016

Indicators / average values for a period2017-20202021-20252026-20302031-2035
Urals crude oil price, USD per barrel40.243.347.852.8
Average annual RUR/ USD exchange rate70.075.676.977.4
GDP growth rates, % y/y1.62.12.01.8
Fixed investment growth, % y/y1.23.23.02.7
CPI growth, % y/y4.03.93.43.2

Source: the draft of long-term budgetary projections prepared by the Russian Government (package of the draft law “On the Federal Budget for 2017 and the Planning Period of 2018 and 2019”).[15]

Officially Projected Key Budgetary Indicators of the Russian Federation until 2034, % to GDP

Indicator2017201820192020202520302034
Revenues, total32.732.432.332.031.230.329.9
Revenues of the federal budget15.515.215.014.814.113.413.1
Revenues from the oil and gas sector5.85.55.45.34.74.03.6
Revenues excluding the oil and gas sector9.79.79.69.69.49.59.6
Consolidated budgets of subjects of the Federation (not including inter-budgetary transfers)9.59.59.59.49.49.39.2
Budgets of extra-budgetary funds (not including inter-budgetary transfers)7.77.77.87.77.67.67.5
Outlays, total36.234.933.532.932.031.030.5
Outlays of the federal budget18.717.416.215.714.914.213.9
Outlays of consolidated budgets of subjects of the Federation11.511.311.010.910.510.19.9
Deficit (-) / Surplus (+)-3.5-2.5-1.3-1.0-0.9-0.7-0.7
Deficit / surplus of the federal budget-3.2-2.2-1.2-0.8-0.8-0.7-0.7
Deficit / surplus of consolidated budgets of subjects of the Federation-0.2-0.2-0.1-0.2-0.1-0.020.02

Source: the draft of long-term budgetary projections prepared by the Russian Government (package of the draft law “On the Federal Budget for 2017 and the Planning Period of 2018 and 2019”).[16]

Stable budgetary surplus in the long-run requires implementation of massive reforms aimed at bringing in investment and diversification of the economy with extensive penetration to global value chains that would finally result in growing budgetary revenues (opinion of factosphere.com).



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