Izvestia: "VAT, not oil, will bail out Russian budget”
The parametres of the basic financial document, however, differ a great deal from the earlier ones quoted by official planners. According to Kudrin, the expectations now look much better, especially with regard to the budget deficit, which will be substantially lower.
This was confirmed a bit later, with figures in hand, by Deputy Finance Minister Tatiana Nesterenko. For example, the updated draft sets a budget deficit at 1.5% of GDP, while earlier the government oriented itself on 2.7%. Kudrin said the Finance Ministry is expecting a considerable growth in budget revenues. But the balance will not be maintained, because both incomings and outgoings will grow at the same time: the government is also planning a sizeable increase in spending. According to the updated figures, budget revenues in 2012 are to reach about 11.8 trillion roubles and expenses, 12.7 trillion. Earlier these figures looked more modest – 10.6 trillion and 12.2 trillion, respectively.
Curiously enough, the Finance Ministry expects to receive more revenues from VAT collection than from oil and gas earnings (oil prices are predicted to jump to $100 per barrel). That is to say the minister practically hinted that the country would start slowly getting off the oil drip. How realistic is this scenario?
Yevgeny Gavrilenkov, chief economist at Troika Dialog Investment Bank, believes it is necessary to study a breakdown of the planned expenses before drawing such conclusions.
"We reported a surplus of about 760 billion roubles for the first seven months of 2011," says Gavrilenkov. "The revenues came mainly from the non-oil and gas sector. If spending remains the same as this year, it will be quite realistic to reduce the budget deficit in 2012."
But the government, as we see, is not going to cut down expenses in the election year, although it hopes to avoid overspending in 2011. As it emerged recently, the Finance Ministry expects a zero budget deficit this year, which can be specifically attained through cost-saving measures.
"We will try to keep within the current savings and not to increase spending," he said.
2012 will not be as frugal in terms of spending, so a narrowing of the deficit is possible, but unlikely to lead to a zero balance or, moreover, to a surplus. Alfa Bank chief economist Natalya Orlova believes this year's non-oil revenues can reduce the budget deficit next year.
In January-July 2011, budget revenues amounted to something like 5.6 trillion roubles, according to statistics released by the Federal Taxation Service. Compared with the same period in 2010, the increase was 27%. VAT collection rose by 38% (up to 1.4 trillion roubles this year against 758 billion roubles last year).
Natalia Orlova chalks this trend up to the government's continued adherence to a soft social policy.
"The tax reflects purchasing power," she says. "Retail lending picked up in the second quarter."
The Finance Ministry's promise looks, therefore, realistic, although the fact that the oil sector is still the most reliable source of budget receipts and trends in this market cannot be overlooked. Dmitry Bedenkov, head of the RUSS-Invest think tank, does not believe the Russian economy can generate enough non-oil funds.
"The Ministry of Economic Development has only just revised a forecast for the Russian economy to 2013," he says. "Compared with April estimates, oil prices in 2012 are expected to jump from $93 to $100. Nothing but a growth of oil revenues can bail out our budget, which is overburdened with expenses."
by Maria Sarycheva
