Russian budget executed with surplus earnings

The Russian government is summing up the federal budget for the first half of 2011. The budget surplus since the beginning of the year was 2.9% of the GDP, and the country's leadership is not going to stop there. This is not surprising, since the plan is to increase the revenues as much and as quickly as possible. This is especially necessary for the formation of the Reserve Fund.

The materials prepared for the meeting of the government state that the federal budget surplus in January-June of 2011 amounted to 703.5 billion rubles. The volume of the GDP for the 1st half of 2011 was 24,085.0 billion rubles and increased by 3.9% compared to the corresponding period last year.

Federal budget revenues for January - June amounted to 5,306 billion rubles. Federal government expenditures for the period amounted to 4, 602.9 billion ruble, Finmarket reported.

The tax revenue amounted to 53.5% of the total budget, non-tax revenues - 46.5%. Most of the federal budget was formed at the expense of value-added tax (29.2%), customs duty revenues (36.4%), tax on mineral extraction (17.9%) and other income (16.5%).

The amount of public external debt of the Russian Federation as of July 1 decreased in comparison with its volume as of January 1, 2011 by 183.3 billion rubles and amounted to 1,034.4 billion rubles. As of July 1, the total amount of the Reserve Fund amounted to 746.8 billion rubles, the total amount of in the national well-being fund - 2,600.4 billion rubles. During the 1st half of 2011 the volume of the Reserve Fund fell by 95.5 billion rubles, while the volume of the National Welfare Fund - 28.4 billion rubles.

Anton Safonov, an analyst with Investkafe, noted that such results are not surprising, and are linked to the high price of oil. According to him, the expected Russian budget deficit in 2011 will amount to 1-1.4% of the GDP at a price of $105 per barrel.

"In fact, everything will depend on the average price of oil. It is possible that it will be slightly higher than that, which will immediately reduce the deficit and it will reach below 1%. The current price of oil is at $115, which coincides with the optimistic forecasts of the average annual oil price. Thus, under a favorable scenario, the budget deficit could reach approximately 0% by the end of the year," said the expert.

According to Investkafe, the fact that the government is trying to reduce the deficit as much as possible is very significant because it is planning to increase the revenues as much as possible. Certain funds are necessary for the quick formation of the Reserve Fund. "More than 1.1 trillion rubles from additional oil revenues in 2011 will go to the reserve fund, which now has only 746,840 million rubles. In early 2009, its volume was over four trillion rubles, and the fund allowed to significantly mitigate the impact of the global financial crisis. This means that at the moment the government is preparing for a new crisis or a collapse in oil prices, sacrificing the economic growth because of the increased social spending, military-industrial complex expenditure, etc. At the same time, spending on innovation and infrastructure development is growing at a much slower rate," Safonov said.

He also explained to Bigness.ru, that there are serious risks in any case. "First, oil prices could fall significantly, especially over such a long period. The forecast of the Ministry of Finance is quite conservative and assumes $97 per barrel in 2014. Most likely, prices will be higher and thus the need for borrowing will also be lower. But still, the economy is highly dependent on the price of oil and petroleum products, and reducing the price by $10 will reduce revenues by 500 billion rubles, which will lead to an increase in deficit somewhere in the 1% of GDP," concluded the expert.

Artem Cherniavsky.