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Key points of Russian 2018 budget

The Russian State Duma has passed the bill on federal budget for 2018 and the planned period of 2019-2020

TASS-FACTBOX. November 24, 2017. The Russian State Duma (lower house of parliament) has passed the bill on federal budget for 2018 and the planned period of 2019-2020 in its third reading. According to the bill, Russia’s budget revenues will amount to 15.26 trillion rubles ($256 bln) in 2018, 15.55 trillion rubles ($260 bln) in 2019, and 16.3 trillion rubles ($273 bln) in 2020. Expenditures are planned at 16.53 trillion rubles ($277 bln) in 2018, 16.4 trillion rubles ($275 bln) in 2019, and 17.15 trillion rubles ($287 bln) in 2020. Federal budget deficit will total 1.3 trillion rubles ($21.8 bln) in 2018, 819.1 bln rubles ($13.7 bln) in 2019, and 870 bln rubles ($14.5 bln) in 2020.

The bill also envisions a transition to the new budget rule. Starting 2018, additional oil and gas revenues received from the price of Urals crude oil above the base of $40 per barrel in 2017 prices, will be allocated on reserves instead of expenditures. The base price will be adjusted by 2% annually starting 2018.

Three-year budget

In 2006, Russian President Vladimir Putin proposed to adopt budget for three years. In July 2007, Putin signed the federal law "On the federal budget for 2008 and for the planning period of 2009 and 2010". This was the first financial document in the history of the country designed for a medium-term perspective for three years. October 1, 2015, Russian President Vladimir Putin signed a law on returning to one-year budget planning. This decision was made to avoid mistakes in distribution of public finances due to fluctuations in currency rates and oil prices. However, the next budge, for 2017 and the planning period 2018-2019 has again become a three-year budget.

Order of approval

The Russian government drafts the federal budget, at least ten months before the beginning of the next fiscal year and is based on the Budget Address of the Russian President (since 2014 it is an integral part of the presidential address to the Federal Assembly), the forecast of socio-economic development and the main directions of the budget and tax policy for the next year.

In accordance with the Budgetary Code, the government submits a draft federal budget to the State Duma before October 1 of the year. The State Duma considers the document in three readings.

In the first reading, the deputies discuss its concept, the forecast of the social and economic development of the Russian Federation, including the projected volume of GDP and inflation that form the basis for the formation of the budget’s main characteristics, main directions of fiscal and tax policy. If the document is rejected in the first reading, it is transferred to the conciliation commission, which within ten days develops another version of the budget’s most important characteristics.

In the second reading, the State Duma considers additions, in particular, establishing a list of revenue administrators and sources of financing for the budget deficit, distribution between the subjects of the Russian Federation and intergovernmental transfers, budgetary allocations, etc.

In the third reading, the State Duma deputies approve budget expenditure structure for the next financial year and planning period. After the federal budget is adopted by the State Duma and approved by the Federation Council, it is signed by the Russian president.

The law on budget is a very large document - a printed version of the law for 2017-2019 is 4,713 pages long.

In addition to the federal budget, there is a consolidated budget - a set of a federal and consolidated budgets of the subjects of the Russian Federation except budgets of state and territorial non-budgetary fund.

Budget for 2017

The federal budget for 2017 and for the planning period 2018-2019 was adopted by the State Duma on December 9, 2016, approved by the Federation Council on December 14 and signed by the Russian President on December 19. Taking into account the amendments of July 1, 2017, budget revenues should amount to 14.72 trillion rubles ($252.55 bln), expenditures - 16.73 trillion rubles ($287 bln). According to the forecast, budget deficit will be about 2% of GDP.