Federal budget turned to slight deficit in 2014 (Russia)

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/05

Budget revenues increased by 11 % last year. There was a bigger rise in revenues in these nominal terms during the final months of the year, reflecting the continued slide of the ruble, which boosted dollar-denominated oil tax revenues, and a backlog of other revenues. Federal budget expenditures also rose by 11 %. The budget deficit corresponded to 0.5 % of GDP.

Growth in federal budget spending would have stayed below 4 % and the budget would have been clearly in surplus (nearly 1 % of GDP) without the 1 trillion rubles in support granted to the deposit insurance agency in December. Needs have already risen for the agency to use the grant for supporting operational banks that meet the criteria for eligibility. Budget spending caused by the support measure was financed by giving the grant to the agency in the form of government bonds that the agency turns over to select banks. The banks, in turn, can use the bonds as collateral when securing credit from the central bank.

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