BOFIT Weekly Review 2015/21
Nominal increase in public sector revenues comes to a near halt
First-quarter revenues to the consolidated budget, which includes federal, regional and local government budgets, as well as state social funds, increased by 1 % y-o-y in nominal ruble terms. Taking inflation into account, real revenues plummeted.
In the January-April period, revenues from export duties and production taxes in the oil & gas sector (which are nearly all denominated in dollars) were down over 20 % y o-y in nominal terms (15 % in the first quarter). While lower oil prices reduced these revenues, the weakened ruble strongly offset the drop. The change in oil taxation implemented at the start of this year has also altered the revenue picture by reducing the oil export duty and raising oil production taxes. Other revenue streams to the consolidated budget were up 8 % y-o-y in the first quarter.
First-quarter consolidated budget spending increased by 20 % y-o-y in nominal terms. Topping spending growth was defence, this year an unusually front-weighted category (high outlays at the start of the budget year), which rose 50 % in the first quarter and 45 % for January-April. Pensions and other social security spending also increased about 30 %. Among spending in other major budget categories, spending on the economy and housing rose about 10 %. Spending on education and healthcare was unchanged in nominal terms from a year ago, while nominal spending on domestic security and law enforcement decreased slightly.
Federal budget revenues fell by more than 2 % y-o-y in the first quarter and more than 4 % in January-April. Regional and local government budget revenues, as well as revenues to state social funds, fell sharply. Federal budget transfers were used to make up for the reduced regional revenues and replenish social funds.
The consolidated budget deficit in the first quarter equalled 2.5% of GDP.
Change in public sector revenues and expenditures, 3-month moving total, %
Sources: Finance ministry and Rosstat