A budget deficit of 0.3% of GDP is not fatal for Russia

Russia's Finance Ministry has worsened its forecast of the deficit of the RF Federal budget in 2012 to 0.2-0.3% of GDP from 0.1% of GDP approved by the law.
Today the index of the budget deficit in Russia is very comfortable for the authorities. We note that the budget deficit of some European countries often reach or even exceed 10% of GDP.

 By the way, there are very few countries with budget surpluses. On the other hand, the Finance Ministry of Russia is known for its conservative approach to budget planning. Partly this is correct because it allows to create a safety cushion.

The Ministry of Finance lays quite skeptical oil price forecasts in the budget adjustments, which in the end did not come true.

 For example, in the 1 half of 2012 and all of 2011 Russian budget was implemented with a surplus and this was despite the fact that it was planned deficit. It is highly probable that this year Russia will fulfill the budget with a surplus.

However, I see two key points to reduce the budget deficit. The first is the reduction of subsidies to commercial enterprises on the article «national economy», which made up a fifth of budget expenditures - 2 trillion rubles annually, which is more than the deficit of the Pension Fund. Secondly, we need to reduce military spending, which is already known.

 S. Zhavoronkov, Ph.D. senior researcher of the Scientific direction «Political economy and regional development».