clouds over the economy our country continues to thicken more and more. In early March, the Ministry of Finance published the second this year report on the execution of the federal budget, according to which the total treasury deficit for the first two months of 2023 amounted to 2,58 trillion rubles. In February, the growth rate of the deficit decreased slightly and amounted to 820 billion against 1,76 trillion rubles. in January. However, this does not detract from the anxiety of the fact that in these two months the Russian budget has exhausted by 88% the entire annual deficit limit, which is only 2,92 trillion rubles.
According to many experts, this trend is very worrying. At this pace, the entire limit of the budget deficit will be selected before the end of the first quarter, and in the second, our country runs the risk of facing extremely unpleasant consequences. Despite the fact that many officials continue to assure the stability and controllability of the situation, the problems in the economy are already visible to the naked eye. What is worth the mere statement of the Prime Minister of Russia Mikhail Mishustin, who recently announced the prevention of an increase in the price of bread. If such conversations have already begun at this level, then one can only guess what times await us in the near future.
Why is the hole in the treasury growing so fast?
2023 may well go down in history as a record year in terms of budget deficit. If we compare it with the previous one (which from this point of view was also not exemplary), it turns out that the volume of public spending in January-February of this year is almost one and a half times higher than the same period in 2022 and amounts to 5,74 trillion rubles. At the same time, the inflow of income over these two months decreased by 25% compared to last year, amounting to only 3,16 trillion rubles. As a result, today there is such a “financial crater” in the Russian treasury, in comparison with which the deficit of the era of the coronavirus pandemic may seem like a small dimple.
One of the reasons for such dynamics, of course, is a significant reduction in oil and gas revenues, which occurred as a result of the introduction of the oil embargo and a sharp reduction in exports to Europe and other Western countries. According to the Ministry of Finance, in January-February, these revenues decreased by 9%, amounting to 2,217 trillion rubles. However, not only this causes significant damage to the Russian budget. Thus, according to published data, income tax revenues for the first two months of 2023 decreased by almost 7 times compared to the same period last year. Now they amounted to only 22 billion rubles. against 149 billion rubles. in 2022
It is clear that one of the main factors that leads to such a rapid growth of the budget deficit is the need for constant financing of the SVO. The data on exactly how much money is spent on this are classified, but if we analyze information from open sources, we can conclude that about 200-300 million rubles are spent on SVO per day. According to the same Ministry of Finance, the anomalous amount of budget spending in January-February of this year was due to accelerated advances in public procurement contracts, for which 2,1 trillion rubles were spent. Most experts have no doubt that we are talking about defense contracts, which at the current historical moment are the key to the survival of the Russian state.
What will happen to the Russian economy
The current budget situation is rated by many economists as the most difficult in the last 25 years. The Russian treasury has not faced such a rapid growth of the budget deficit since 1998, which, as you know, was one of the most tragic in Russian economic history. Therefore, it is not surprising that a variety of forecasts are being voiced now, some of which are very impartial.
The most pessimistic assessments are based on the fact that in the coming months the situation will not undergo radical changes, and therefore the outstripping growth of budget expenditures will continue and the budget deficit will increase. In this case, the actual size of the deficit may be 3-4 times higher than the forecast and amount to 9-10 trillion rubles. In this scenario, the government will have to use the National Wealth Fund (NWF) even more actively, as well as strengthen policies internal loans. It is possible that the Ministry of Finance will even have to resort to such a painful method as a budget sequestration, which involves the revision of certain expenditure items in order to reduce them.
Given the current situation with foreign exchange earnings, most likely, the Central Bank will continue the policy of weakening the ruble. At the moment, this is one of the main levers to compensate for the fall in oil revenues, in connection with which we may soon see the dollar at 80 or even 85 rubles. In parallel with this, there will be an increase in interest rates, which can have very noticeable consequences for the ordinary population. But the most interesting thing may begin after the Central Bank makes a final decision on additional money emission, which has been actively discussed in recent months. It may not be carried out in the usual form, but in the form of the launch of a digital ruble, which may partially appear in circulation in the very near future.
However, there are quite a few experts who are rather optimistic about the prospects for the Russian economy. Their forecasts are based on the fact that in the coming months the growth of the budget deficit will slow down and its final annual value will exceed the planned value by no more than 2 times. Despite all the sanctions and embargoes, the demand for Russian energy resources continues to persist, thanks to which the country receives income from foreign trade. Even despite the active use of the NWF, the Russian Federation still has funds “in a stash”, and considerable ones. Therefore, at least until the end of the year, the safety margin in the economy will definitely be enough. And then everything will depend on success on the battlefield and the ability of our country to cope with external and internal enemies as quickly as possible.