The problems of the metallurgical industry in Russia have seriously hit the non-oil and gas part of the Russian budget revenues, according to statistics from the Ministry of Finance. In July, their share fell by 29% and amounted to only 990 billion rubles against 1.39 trillion in 2021. Oil and gas revenues also fell – by 22% compared to last year, amounting to 771 billion rubles. Since the beginning of the year, Russian budget revenues have already fallen by 26%, or 1.76 trillion rubles, which creates serious risks for financial stability, RBC notes .
Moreover, a net drop in income (adjusted for inflation) would be even greater: according to current data from Rosstat, inflation in Russia is kept at 15%. But even without inflation, the recorded decline in non-oil and gas revenues was the largest since the publication of such statistics by the Ministry of Finance, that is, since 2011. Only twice the indicator fell more strongly, however, this was due to anomalous transactions that influenced the indicator: in April 2021, non-oil and gas revenues fell by 29.6% due to a transaction by the Ministry of Finance to buy a controlling stake in Sberbank with money from the National Welfare Fund (NWF), and in 2016 by 32% due to the privatization of Rosneft and the further payment of an increased dividend to the budget by Rosneftegaz.
In July, the federal budget was executed with a deficit of 892 billion rubles, which is close to historical highs, the newspaper notes. However, the forecast for 2022 for the Russian budget is still positive: the Ministry of Finance expects a surplus by the end of the year by 482 billion rubles. The key reason for the negative dynamics of non-oil and gas revenues was problems in the metallurgical industry, which is experiencing a large-scale crisis: sanctions have cut off Western markets, a too strong ruble exchange rate makes Russian products uncompetitive in Asian markets, and hopes for the domestic market are not justified due to falling demand within Russia against the backdrop of reducing consumption by automakers and construction companies.
The high figures of the fall are also due to the effect of a high base – a year ago, the Russian economy showed good recovery rates against the backdrop of a recovery after covid restrictions, economists say. Analysts also emphasize that the strong ruble is now hurting all Russian export-oriented revenues, and it is for the same reasons that the Russian budget is now short of revenues in the oil and gas sector.
Experts' forecasts regarding the prospects for the Russian budget do not inspire optimism: in the third quarter, the low dynamics of budget revenues will continue, caused by the same problems – weak imports, the inability to quickly reorient to other markets, logistical difficulties and the high exchange rate of the ruble. At the same time, the budget deficit may continue to grow, experts say, because of which Russian reserves will have to be spent – the National Welfare Fund, a significant part of which is frozen by Western sanctions. The high expenses of the National Welfare Fund may lead to a new round of inflation, since the Bank of Russia cannot sell the frozen currency, but prints rubles against these “virtual reserves”.
