UPDATE 3: Govt plans Russian budget deficit at 1.332 tln rbl 2018

(Adds details in paragraph 15)

MOSCOW, Sep 18 (PRIME) -- The Russian government has approved a draft budget for 2018–2020 with the deficit at 1.332 trillion rubles in 2018, 867 billion rubles in 2019 and 960 billion rubles in 2020, Finance Minister Anton Siluanov told reporters at a briefing on Monday.

“Yes, everything is approved,” Siluanov said.

The deficit will account for 1.37% of gross domestic product (GDP) in 2018, 0.84% in 2019, and 0.87% in 2020.

Budget revenue is planned at 15.18 trillion rubles in 2018, 15.55 trillion rubles in 2019, and 16.28 trillion rubles in 2020. Budget spending is expected at 16.5 trillion rubles in 2018, 16.4 trillion rubles in 2019, and 17.2 trillion rubles in 2020.

The ministry plans to spend 1.114 trillion rubles from the National Wealth Fund in 2018 to cover the budget deficit and co-finance voluntary pension savings, 4.5 billion rubles in 2019 to finance voluntary pension savings, and 3.8 billion rubles in 2020 finance voluntary pension savings.

The fund will amount to 3.662 trillion rubles as of the end of 2018, to 4.272 trillion rubles as of the end of 2019 and to 4.347 trillion rubles as of the end of 2020.

The Reserve Fund is planned to be fully spent in 2017 and will cover a 1.061 trillion ruble deficit of the budget. The National Wealth Fund spending can amount to 663.5 billion rubles.

The Reserve Fund will be dismantled no later than on February 1, 2018, and any additional oil and gas revenue for 2017 will be sent to the National Wealth Fund, including 582.5 billion rubles in 2018 and 488.1 billion rubles in 2019.

Net domestic borrowing is planned at 867.969 billion rubles in 2018, 869.646 billion rubles in 2019 and 1.341 trillion rubles in 2020.

The ministry plans to exchange up to 100 billion rubles of older OFZ government bonds for new issues per year.

Eurobond placements are planned to amount to a equivalent of U.S. $7 billion annually in issues with a maturity of up to 30 years. The ministry also confirmed plans to exchange up to $4 billion of older issues for new ones per year.

The ministry also offered to allocate 222 billion rubles on agriculture development annually in the period.

National defense spending can be reduced to 943.6 billion rubles in 2018, 860.6 billion rubles in 2019 and 869.13 billion rubles in 2020 from 1.021 trillion rubles in 2017.

National security and law enforcement spending can grow to 1.3 trillion rubles in 2018, 1.306 trillion rubles in 2019 and 1.316 trillion rubles in 2020 from 1.271 trillion rubles in 2017.

Budget spending on the state program to develop the nuclear industry will amount to 56.1 billion rubles in 2018, 54.7 billion rubles in 2019, and 55.6 billion rubles in 2020.

Prime Minister Dmitry Medvedev said the budget is aimed at fulfilling social liabilities. “We took as a premise fulfillment of two tasks while preparing it (the budget). The budget must ensure fulfillment of social liabilities to our citizens and create conditions for stable economic growth.” He added that social liabilities will be fulfilled in any economic situation.

The budget includes a moratorium on a tax burden rise for law-abiding households, Medvedev also said.

Siluanov said that the draft budget includes 400 billion ruble annual revenue from state companies’ dividends, basing on a dividend rule envisaging payment 50% of the net profit under International Financial Reporting Standards (IFRS), but the government will decide on the dividends of key state companies case per case.

“We are also including dividend payments by banks with state participation which will be calculated including on the base of fulfillment of capital adequacy rules,” Siluanov said.

Economic Development Minister Maxim Oreshkin said that the budget does not envisage privatization of large stakes in state companies. The privatization forecast in the budget is conservative and must be met in any circumstances, he said.

(57.5336 rubles – U.S. $1)

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