Revenue boom of Russian federal budget begins to normalise

After climbing by nearly 30 % last year in nominal terms, budget revenues rose another 13 % y-o-y in the first quarter of this year. Revenues from oil & gas taxes increased by 7 % after rising by about 50 % last year. Other budget revenues increased at about the earlier rate of over 15 %. A similar pace of growth was seen in VAT revenues. The impact on budget revenues from the VAT increases of January 1, 2019 is still ahead as VAT is paid with a quarter’s delay.

Growth in federal budget spending accelerated from last year to over 8 %, which is the pace budgeted for this year. Defence spending increased by 13 % y-o-y in the first quarter. The budget surplus for the last twelve months still corresponded to 2.8 % of GDP.