Media reported about the fall of budget revenues in 2019 to a minimum of 20 years

Federal budget revenues in relation to GDP will continue to decline in the next three years and in 2019 will drop to 20-year low at 13.3% of GDP, according to “Vedomosti” with reference to the draft budget 2017-2019 years. The newspaper notes that less — 12.8% of GDP — was only in 1999.

According to the forecast of the structure of budget revenues, according to “Vedomosti”, oil and gas revenues will continue to decline in nominal terms and relative to GDP, and oil and gas are increasing in nominal terms, but the pace of growth lags behind the rate of nominal GDP.

The share of revenues redistributed through the Federal budget in the next three years will fall to 13.7% of GDP, whereas over the previous 10 years averaged 20% of GDP. The reason — declining oil and gas revenues. In 2016 they will budget at least 6% of GDP income, while ten years ago, in 2006, brought 10%; in 2018 or 2019, this figure will be less than 5%. Non-oil revenues, meanwhile, do not compensate for this decline.

As the “Vedomosti”, the calculations for the next three years is made on the basis of the basic version of the updated forecast, the MAYOR, under which the price of oil remains at $40 per barrel all the next three years.

Budget revenues in 2016, according to Finance Ministry estimates, will be at 1.2 trillion rubles less than planned by the budget law, which was adopted on the basis of $50 per barrel. New estimate — $41 per barrel. Revenues in 2016 compared to 2015 will be less than 8%, and taking into account the average inflation rate of decline in real terms will exceed 15%. To grow revenues, according to the forecast of the Ministry of Finance will start only in 2018, but slower than the average rate of inflation. As a result, in real terms, they are reduced by almost a quarter by 2015.

Expenses for the same period will be reduced in real terms by almost 20%, provided that their level will be frozen for all three years, as suggested by the Cabinet, and that the cost of 2016 will also be reduced to this level. Without spending cuts the deficit in 2016 is more than 4%, while the Finance Ministry wants to meet 3.3%.

By freezing nominal spending for the next three years at the same time, we either need to cut them by 3.5 trillion rubles., or this amount to increase revenues. Otherwise planned by the Ministry of Finance for a gradual reduction of the deficit will not work. The government has so far rejected the proposals of the Ministry on increasing revenue by raising taxes in 2018.

Conservative planning leaves a budget the opportunity to get into the reality of higher incomes, according to “Vedomosti”. The head of the MAYOR Alexei Ulyukayev believes that maintaining oil prices at their current level of $41-42 / barrel in the next three years is unlikely. A more realistic forecast is $50 in 2017 and $55 in the next two years. According to Federal officials, the newspaper writes, the MAYOR was the idea of this script to offer as a basis of the budget to avoid the more stringent consolidation.

The rise in the price of oil for each $1 with $40 a barrel, according to calculations of the Ministry of Finance will budget an additional 87 billion RUB, if at the same time will increase the ruble to 144 billion rubles, if the ruble will not change. The required scale of consolidation in 2017 710 billion (3.5 trillion over three years). Thus, an additional $10 per barrel in 2017 we can fully solve the question, write “Vedomosti”.

Had the idea to lay a higher price of oil and other ruble exchange rate, says the Federal official, but is refused — agreed that “the budget will fall $40 for the next three years”. According to officials, the income 2016 revised due to changes in oil prices and the exchange rate, but 10% brief limits will allow to reach a deficit of slightly more than 3.2%.

The Director of the development Center of the Higher school of Economics Natalia Akindinova emphasizes that even the freezing nominal spending could cost the economy 0.5 percentage point of growth per year. However, according to her, the budget is better to plan conservatively, and in the case of additional income is to send them to the accelerated deficit reduction. To accelerate growth we need not raise the overall level of spending and change their structure — replace overhead costs in the productive and also to carry out reforms. Akindinova notes that at such low incomes — at the level of 13% of GDP — the budget will not be able to Fund the costs required by the state to perform its functions, and raising taxes is inevitable.