After turning in a surplus in January, the Russian budget went back into deficit of RUB111.67bn ($1.6bn), or 1.9% of GDP, albeit well below the 3-5% deficit the country is expected to end this year with.
The result is significantly down on the Finance Ministry's earlier estimate of a deficit of RUB437bn and will be welcome news for Finance Minister Anton Siluanov, who is struggling to keep the deficit of 3% as dictated by President Vladimir Putin.
While the deficit will certainly rise as the year wears on, some of the pressure is coming off Siluanov thanks to the recent rise in oil prices off their January low of $27 per barrel to touch $40 on March 7.
If oil prices stay at $40 and the ruble/dollar exchange rate is RUB68 to the dollar then the government will end the year with a 3.3% deficit. Each dollar rise in the price of oil shaves approximately 0.7% off the deficit.
The budget law currently calls for RUB13.7 trillion of revenues and RUB16.1 trillion of spending for all of 2016. Budget revenues as of March 1 were RUB1.841 trillion and expenses RUB1.952 trillion, or 13.4% and 12.1% of the total earmarked for this respectively. However, Siluanov is due to release a revised budget in March that takes account the lower than expected oil prices; the budget law was passed in December with a $50 average oil price assumption; the new plan will include a scenario for $35 oil.
The biggest part of spending was on the social sphere, which Putin has put off limits when it comes to cuts as a general election is slated for September. Social spending in January-February came to RUB744.5bn, or 40% of the total spend. Defence was in second place in terms of spending, totalling RUB343.3bn, or 17.6% of the total. In 2015, defence spending soared, accounting for a third of all spending, whereas social spending made up a quarter of the total, indicating a reorientation of priorities away from the military conflicts and towards the elections for the moment.
Debt service remains, costing the government only RUB119.3bn, or 6% of total spending.
The January, federal budget was executed with a surplus of RUB391bn, revenues of RUB1.1 trillion and expenses of RUB697bn.