Russian authorities are launching a budget sequestration for key projects to support the national economy after a sharp drop in oil and gas revenues, on which every third ruble in the treasury depends.
According to Kommersant, it was decided to cut funding for the aviation industry development program, within the framework of which the Kremlin hoped to replace Western airliners on Russian airlines. The total budget of the program will be reduced by 22% from the original 101.2 billion rubles to 78.8 billion rubles, according to amendments to the budget law approved by the Duma Committee on Industry.
The basic state program "Development of Industry and Increasing Its Competitiveness", within the framework of which it was planned to increase the production of civilian goods by 40% by 2030, will lose 66.9 billion rubles in funding.
Expenditures on supporting the auto industry will be cut by 35 billion rubles, on “high-tech industries” — by 46 billion rubles, on “production of innovative transport” — by 25 billion rubles, on production of ships and marine equipment — by 12.6 billion rubles. Expenditures on supporting research and development (R&D) in civilian industries will be cut by 9 billion rubles.
Almost a third of funding — 1.7 billion rubles out of 5.6 billion — will be lost by the federal project for the production of industrial robots, within the framework of which President Vladimir Putin demanded that Russia be brought into the top 25 countries in the world in terms of robot density.
The government is switching to austerity mode against the backdrop of a sharp drop in collections of raw material taxes: budget revenues from oil and gas in February and March fell by 17% year-on-year, the accumulated total for January–April — by 10%, and in May, according to Reuters calculations, the decline accelerated to 33%.
According to Argus, Russian Urals oil is currently selling for $50-52 per barrel, although the budget was drawn up with an expectation of $70. The situation is aggravated by the strong ruble: for the first time in two years, the dollar exchange rate has settled below 80 rubles instead of 94.6 rubles, as included in the treasury project. As a result, the ruble price of oil - a critical parameter for the budget - fell below 4,000 rubles per barrel, which is a third lower than the budget target.
According to the Finance Ministry's calculations, by the end of the year the budget will be short 2.6 trillion rubles of oil and gas revenues compared to the original plans, and its deficit will be three times higher than the original estimates and will be a record since the pandemic - 3.8 trillion rubles.
In order to make ends meet in the budget, the Finance Ministry and the Central Bank are considering the possibility of devaluing the ruble - to 100 per dollar, a source in the government told Reuters. However, the authorities fear that the fall of the ruble could become uncontrollable and accelerate inflation, which the Central Bank is desperately trying to slow down with a key rate of 21%, the highest in two decades.
It is becoming increasingly difficult for the Finance Ministry to patch up the budget with reserves: the liquid assets of the National Welfare Fund have decreased threefold since the beginning of the war and amount to only $40 billion, the lowest since the creation of the National Welfare Fund in 2008.
According to Kommersant, it was decided to cut funding for the aviation industry development program, within the framework of which the Kremlin hoped to replace Western airliners on Russian airlines. The total budget of the program will be reduced by 22% from the original 101.2 billion rubles to 78.8 billion rubles, according to amendments to the budget law approved by the Duma Committee on Industry.
The basic state program "Development of Industry and Increasing Its Competitiveness", within the framework of which it was planned to increase the production of civilian goods by 40% by 2030, will lose 66.9 billion rubles in funding.
Expenditures on supporting the auto industry will be cut by 35 billion rubles, on “high-tech industries” — by 46 billion rubles, on “production of innovative transport” — by 25 billion rubles, on production of ships and marine equipment — by 12.6 billion rubles. Expenditures on supporting research and development (R&D) in civilian industries will be cut by 9 billion rubles.
Almost a third of funding — 1.7 billion rubles out of 5.6 billion — will be lost by the federal project for the production of industrial robots, within the framework of which President Vladimir Putin demanded that Russia be brought into the top 25 countries in the world in terms of robot density.
The government is switching to austerity mode against the backdrop of a sharp drop in collections of raw material taxes: budget revenues from oil and gas in February and March fell by 17% year-on-year, the accumulated total for January–April — by 10%, and in May, according to Reuters calculations, the decline accelerated to 33%.
According to Argus, Russian Urals oil is currently selling for $50-52 per barrel, although the budget was drawn up with an expectation of $70. The situation is aggravated by the strong ruble: for the first time in two years, the dollar exchange rate has settled below 80 rubles instead of 94.6 rubles, as included in the treasury project. As a result, the ruble price of oil - a critical parameter for the budget - fell below 4,000 rubles per barrel, which is a third lower than the budget target.
According to the Finance Ministry's calculations, by the end of the year the budget will be short 2.6 trillion rubles of oil and gas revenues compared to the original plans, and its deficit will be three times higher than the original estimates and will be a record since the pandemic - 3.8 trillion rubles.
In order to make ends meet in the budget, the Finance Ministry and the Central Bank are considering the possibility of devaluing the ruble - to 100 per dollar, a source in the government told Reuters. However, the authorities fear that the fall of the ruble could become uncontrollable and accelerate inflation, which the Central Bank is desperately trying to slow down with a key rate of 21%, the highest in two decades.
It is becoming increasingly difficult for the Finance Ministry to patch up the budget with reserves: the liquid assets of the National Welfare Fund have decreased threefold since the beginning of the war and amount to only $40 billion, the lowest since the creation of the National Welfare Fund in 2008.
