Russian cabinet to consider 2019-2021 draft budget

The Russian government will consider the draft federal budget for 2019 and the planned period of 2020-2021 and a number of relevant bills at a meeting on Thursday, the cabinet’s press service said. The document will be presented by First Deputy Prime Minister and Finance Minister Anton Siluanov.

Cabinet ministers are also expected to discuss Russia’s social and economic development outlook for 2019-2021 and for the period through 2024. The agenda also includes consideration of the projects on main areas of customs tariff regulation and national monetary policy for 2019-2021.

Russia’s Finance Ministry has raised the projected growth of revenues and surplus for the whole planned period in its draft federal budget for 2019-2021. The projections take into account the extension of the anti-Russian sanctions policy and Moscow’s retaliatory economic measures throughout the planned period, though they do not take into account any other geopolitical and economic shocks.

In its 2019-2021 draft budget, the Finance Ministry has upgraded Russia’s federal budget revenues outlook to 19.9 trillion rubles ($298 bln) from 19.8 trillion rubles ($296 bln) for 2019, to 20.1 trillion rubles ($301 bln) from 20 trillion rubles ($299 bln) for 2020, and to 20.9 trillion rubles ($312 bln) from 20.5 trillion rubles ($307 bln) for 2021. According to the document, budget spending will amount to 18 trillion rubles ($269 bln) in 2019, up from 17.8 trillion rubles ($266 bln) expected earlier, 19 trillion rubles ($284 bln) in 2020, up from 18.8 trillion rubles ($281 bln), and 20 trillion rubles ($299 bln) in 2021, up from 19.8 trillion rubles ($296 bln).

The ministry has maintained its forecast for the growth of federal budget surplus in 2019 at 1.8% of GDP. The forecasts for 2020 and 2021 have been raised to 1.1% from 1% of GDP and to 0.8% from 0.6% of GDP, respectively. In 2018, budget surplus is expected to equal 1.3% of GDP.

The three-year draft budget is based on the base case scenario of Russia’s social and economic development for 2019-2021, which relies on the assumption that the global economic growth will slow down from 3.7% in 2017 to 3.2% by 2024 due to the end of the cyclical phase of recovery growth and rising structural restraints in developed countries, tightening of global financial terms and stronger global protectionism.

The macroeconomic outlook notes that GDP growth rate will remain around its current levels by the end of 2018, with economic growth expected to amount to 1.8% by yearend. After the economy adjusts to the macroeconomic policy decisions taken earlier, particularly to the VAT (value-added tax) increase, the Russian economic growth rates are projected to rise gradually to 3.1% by 2021 mainly due to the advanced growth of capital investments.

Meanwhile, the exchange rate of the country’s national currency versus the dollar is expected to return to the level of 63.6-63.8 rubles per dollar in the second half of 2019 and continue showing the rates of weakening close to the inflationary differential between Russia and its trade partners.