The Russian government forwarded to the State Duma a draft law “On the federal budget for 2020 and for the planning period 2021 and 2022”. The speaker of the lower house of parliament, Vyacheslav Volodin, has already handed over the document to the relevant committee on budget and taxes, according to the official website of the State Duma.

It is expected that the draft budget will be considered on October 2 at an extraordinary meeting of the Council of the State Duma. After that, the document will be sent to the Federation Council, the Central Bank, the Accounts and Public Chambers, as well as to the regions and profile committees.

According to the draft budget, in the next three years the revenues of the state treasury will exceed the costs. This was previously stated by Prime Minister Dmitry Medvedev at a government meeting.

“Like this year, the budget for the coming years, that is, for the next three years, will not just be balanced. We assume that it will be in surplus for all three years, ”Medvedev said.

According to the bill, in 2020, the positive difference between revenues and expenditures of the state treasury will be 0.9 trillion rubles (0.8% of GDP), in 2021 - 0.6 trillion rubles (0.5% of GDP), and in 2022- m - 0.3 trillion rubles (0.2% of GDP).

“The government’s strategy for reforming the economy by optimizing budget expenditures, tax control, cutting off inefficient spending, and accumulating reserves has already borne fruit,” German Shekhovtsev, partner in strategy and operational efficiency at Althaus Group, said in an interview with RT.

“The measures implemented were enough to reduce the burden on the budget and reach a surplus in the face of a slowing global economy,” he added.

As expected, treasury spending in 2020 will amount to 19.5 trillion rubles compared to 16.7 trillion in 2018. Moreover, already in 2020, the figure will increase to 21.8 trillion rubles. According to Dmitry Medvedev, the bulk of the funds are planned to be directed to the social sphere. Thus, healthcare financing will increase to a record level over the past 15 years - by more than 50%. At the same time, spending on education and improving demography will increase by 20%.

“When preparing the budget, we proceeded from the fact that it should be socially oriented - this is the most important direction. The money that goes for social support - for the development of education, healthcare, culture - is still the main spending part of the budget, ”the head of the Cabinet emphasized.

The increase in spending on the social sector in the long term should lead to an increase in labor productivity and population incomes, as well as acceleration of the country's economy. Georgy Ostapkovich, director of the Center for Market Research Center at the Institute for Statistical Studies and Economics of Knowledge, HSE, spoke about this in an interview with RT.

“Investing in human capital is a global trend. The growth of investments in education, science, and healthcare leads to an increase in labor productivity and an increase in wages. Accordingly, the poverty rate begins to decline. Due to the increase in salaries, the tax base is growing, that is, money is being returned to the budget and at the same time the production of goods and services is growing, ”Ostapkovich explained.

Social sector financing will take place as part of national projects. According to the budget bill, in 2020 it is planned to allocate 2 trillion rubles to fulfill the goals set by the president. In 2021, the figure will increase to 2.2 trillion, and in 2022 it will be 2.7 trillion. As Vladimir Putin previously stated, the implementation of national projects should lead to an acceleration of Russia's GDP growth rates to 3% already in 2021.

According to the old rules

According to Dmitry Medvedev, the budget rule mechanism was also preserved in the draft budget. It provides that the Ministry of Finance buys currency in the domestic market through the Central Bank to reduce the dependence of the ruble on oil prices. Thus, the economy becomes insured against a fall in the cost of energy resources.

While oil of the Russian brand Urals is trading above the budget mark ($ 42.4 per barrel for 2020), the Ministry buys foreign currency on the excess profit received from its sale and thereby deliberately puts pressure on the ruble. As a result, with rising oil prices, the national currency of Russia does not strengthen, and in the event of a sharp collapse in commodity quotes, the volume of operations of the Central Bank and the Ministry of Finance decreases and pressure on the ruble weakens.

The Ministry of Finance sends the acquired foreign currency to the National Welfare Fund (NWF). According to the draft budget, in 2020 the volume of the NWF will increase from 8.2 trillion to 11.1 trillion, in 2021 - up to 13.7 trillion, and in 2022 - up to 16.2 trillion.

Already in 2020, the volume of NWF funds should exceed 7% of GDP. After this, the fund’s funds are planned to be used to finance investment projects. This was announced on September 26 by First Deputy Prime Minister and Minister of Finance Anton Siluanov.

“Next year, the NWF will exceed the bar of 7%. We expect that this excess will be from 1.5 to 2 trillion rubles. We suggest that part of these funds be directed to investment projects, to repayable projects, about 15-20% of this amount, ”TASS Siluanova quotes.

  • First Deputy Prime Minister - Minister of Finance of the Russian Federation Anton Siluanov
  • RIA News
  • © Alexey Druzhinin

Income sources

According to the draft budget, in 2020 treasury revenues will increase by 200 billion rubles (up to 20.4 trillion). In 2021, this figure will be 21.2 trillion, and in 2022, 22 trillion rubles. As follows from the document, trade in energy resources will remain an important item in the revenue item. Moreover, in the event of an increase in oil prices, the replenishment of the budget may turn out to be higher than the intended values. This was told in an interview with RT by Narek Avakyan, Head of Investments Department, BCS Broker.

“In reality, the oil price has not dropped below $ 55 since 2017. If the cost of raw materials again turns out to be higher than predicted, then I do not exclude that the actual budget execution will be much stronger than originally planned, ”the analyst explained.

However, in the next three years, the authorities plan to gradually reduce the dependence of state finances on the sale of hydrocarbons. As follows from the draft budget, from 2020 to 2022 the share of treasury oil and gas revenues will decrease from the current 40.8% to 35%.

In many ways, such dynamics will be associated with a change in the structure of replenishing the country's budget. About this in a conversation with RT, said the professor of the Department of Economics and Finance of the Public Sector of the Institute of Public Administration and Management (IGSU) RANEPA Lyudmila Pronina

“The share of oil and gas revenues will decrease due to an increase in non-oil and gas revenues in non-oil sectors. The Ministry of Finance is cautious and seeks to redistribute the income structure due to possible risks of the global energy market. This is necessary for the stability of the budget system, and therefore the entire economy. It is expected that the share of manufacturing industries, including agriculture and industry, will increase, ”Pronina explained.