Russian parliament passes 2016 federal budget with 3% deficit

By bne IntelliNews December 4, 2015

The lower house of the Russian parliament, the State Duma, passed the 2016 federal budget with a 3% GDP deficit in the third and final reading on December 4, with a comfortable majority of 297 votes for the draft and 149 against.

The government approved the budget in October after switching to "manual control" mode in fiscal planning. As of 2016, it will resort to one-year budgeting instead of three years, and abandon the budget rule benchmark setting the average oil price for capping expenditure levels, in view of the turbulence on the global oil market.

Fiscal adjustments in the new budget include a higher tax burden on large oil companies, the continued freezing of pension accumulations, and slowed indexation of age pensions and public salaries. Military spending remained intact and was adjusted upwards on the last days of budget drafting.

Spending is budgeted to decline by 0.5% y/y in 2015 to RUB13.74 trillion ($202bn at current rates, or 17.5% of GDP), and to RUB16.1 trillion ($237bn, or 20.5% of GDP), respectively.

The budget assumes a $50/barrel average oil price for 2016, average inflation not exceeding 6.4%, and nominal GDP of RUB76.67 trillion.

The 3% budget deficit will be financed by tapping the Reserve Fund, which is projected to decline from RUB3.4 trillion to about RUB1 trillion in 2016.

The government also plans to borrow both domestically and abroad, with net domestic borrowings amounting to RUB300bn ($4.4bn) and net foreign-currency nominated borrowings of $1.47bn.

Related Articles

Russia's MegaFon mobile operator to buy stake in Mail.ru internet major

The shareholders of Russian mobile operator MegaFon have approved the acquisition of a stake in Russian internet services major Mail.ru, the company said on January ... more

Russia's constitutional court overturns European ruling on Yukos compensation

Russia’s constitutional court has overturned the ruling by the European Court of Human Rights that Moscow should pay €1.9bn in damages awarded to shareholders of the dismantled oil company Yukos, ... more

Blow for Russian stocks as Kremlin backs away from higher dividend payouts

Russian stocks are facing a serious setback after it emerged that the Kremlin may be backing out of a decree to force state-owned companies to pay dividends worth 50% of their earnings. The ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss