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Russia may spend additional $11.1 bln from Reserve Fund to cover deficit this year

November 02, 2016, 14:06 UTC+3

The draft amendments imply an increase of Russia’s 2016 federal budget deficit to 3 trillion rubles ($47.2 bln), or 3.7% of GDP

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© Valeriy Matytsin/ITAR-TASS

MOSCOW, November 2. /TASS/. Budget amendments for 2016 have passed their second (main) reading in Russia’s State Duma (lower house of parliament). 310 deputies supported the law, 57 voted against it, one deputy abstained from voting at the plenary session on Wednesday.

The amended federal budget for 2016 implies revenues of around 13.4 trillion rubles ($210.9 bln) versus 13.738 trillion rubles ($216.2 bln) adopted previously. Budget expenditures will increase by 304.3 bln rubles to 16.4 trillion rubles ($258.2 bln).

The draft amendments imply an increase of Russia’s 2016 federal budget deficit from 2.3 trillion rubles ($36.2 bln) to 3 trillion rubles ($47.2 bln), or 3.7% of GDP.

The Finance Ministry plans to bring the budget into balance by 2020 by reducing deficit at least by one percentage point each year. The draft budget for 2017-2019 implies budget deficit of 3.2% of GDP in 2017, 2.2% of GDP in 2018 and 1.2% of GDP in 2019.

According to chairman of the State Duma’s budget and taxes committee Andrey Makarov, 151 amendments had been submitted for the second reading, 67 of them were recommended for adoption, 71 amendments were recommended for rejection and 13 were withdrawn by authors.

The majority of amendments concern reassignment of around 80 bln rubles inside the budget expenditure structure, Makarov said.

The amendment on the possibility of taking extra 705 bln rubles ($11.1 bln) from the Reserve Fund by the government this year, for covering federal budget deficit has been adopted.

"To stipulate that resources of the Reserve Fund in the amount of 705 bln rubles ($11.1 bln) may be allocated in accordance with the decision of the Russian Government to compensate federal budget revenues not received in the course of budget performance in 2016," the document says.

The Finance Ministry earlier requested an option of allocating 1 trillion rubles ($15.7 bln) rubles more from the Reserve Fund. The government needs this measure in case the budget does not receive revenues from privatization of the 19.5% stake in Russian oil major Rosneft by the year-end.

The amendment to 2016 budget, which foresees the possibility of borrowing another 200 bln rubles on the domestic market, remained unchanged after the first reading. Thus, Russia’s Finance Minister Anton Siluanov said the amount of domestic borrowings could be raised from 300 bln to 500 bln rubles.

Inflation target for 2016 has been downgraded from 6.4% to 5.8% in the draft amendments.

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