Stability of the budget system depends on the quality of state government

The quality of state government and efficiency of budget expenses are becoming dominant domestic factors of the budget system stability, its ability to adjust to risks related to falling prices on hydrocarbons and economic growth slowdown.

According to the Federal Treasury the period-end for January-July 2015, the federal budget revenues contracted 1.3 p.p. of GDP, and expenditures went up 3.3 p.p. of GDP on the same period of the previous year. Revenues and expenditures of the consolidated budgets of the constituents of the Russian Federation over six month of the current year up 1.0 and 0.3 p.p. of GDP on six months of the previous year, respectively. Federal budget deficit for January-July 2015 constituted 2.8% of GDP, which is down 4.4 p.p. of GDP of the federal budget balance over seven months last year. Consolidated budget of the subjects of the Russian Federation by the period-end of six months 2015 was executed with a surplus of 1.0% of GDP or up 0.7 p.p. against six months 2014.
Receipts from the foreign economic activity shrank by 2.9 p.p. of GDP in comparison with the same period of the previous year to 4.6% of GDP. Receipts from the Mineral Extraction Tax (MET) over the period-end results for January-July up 0.5 p.p. of GDP against the same period of the previous year to 4.7% of GDP.
Proceeds to the revenue part of the federal budget over seven months of the current year against January-June 2014 generated from domestic VAT up 0.6 p.p. of GDP to 3.8% of GDP and from domestic excises in terms of share of GDP have remained unchanged and came to 2.3% and 0.7% of GDP, respectively. Over the same period, receipts generated from import excises down 0.03 p.p. of GDP to 0.06% of GDP. Earnings from corporate income tax in January-July 2015 as a share of GDP up 0.2 p.p. of GDP.
Federal budget expenditure in terms of share of GDP over seven months 2015 against January-July 2014 have changed as follows:
- Expenses on the national defense up 1.3 p.p. of GDP or up 1.3 time in nominal terms;
- Expenses under the line "Social policy" up 1.2 p.p. of GDP or up 1.3 time in nominal terms;
- Expenses under the line "National security and law enforcement" as a share of GDP have remained unchanged and constituted 2.6% of GDP; when taken in absolute terms contraction constituted Rb 3.9bn;
- Expenses under the line "National economy" and "General state issues" up 0.6 and 0.2 p.p. of GDP, respectively, growth in nominal terms by 24.7 and 13.2%, respectively;
- Expenses under the line "Education" and "Healthcare" have remained unchanged and constituted 0.9 and 0,7% of GDP, respectively; in absolute terms expenditure of education down Rb 0.8bn, and expenditure on healthcare up Rb 19.3bn;
- Expenses under the line "Inter-budget general transfers" and "Housing and utilities sector" in terms of share of GDP decreased 0.1 p.p. of GDP, or down 13.1 and 14.6%, respectively in nominal terms;
- Expenses on public debt servicing up 0.1 p.p. of GDP to 0.7% of GDP or by 29.2% in absolute terms;
- Other lines of the federal budget expenditure changed slightly as a share of GDP within 0.04 p.p. of GDP.
Тatiana Tichshenko – senior researcher of the Budget Policy Department