The Finance Ministry refused to budget sequestration in 2016

The Ministry of Finance on Monday, October 3, published on the portal the draft amendments to the Federal law on the budget for 2016. The forecast amount of budget revenues predictable reduced — 370 billion rubles., to 13.37 trillion rubles. due to the fact that initially, the draft budget was laid, the average price of Urals oil at $50 per barrel, but in the first nine months of 2016, according to the Finance Ministry, it was only $39,9.

But despite shrinking revenues, expenditures not only reduced, but even increased. The total volume of budget spending in 2016, it is proposed to increase to 304 billion roubles, to 16.4 trillion rubles, follows from the project of the Ministry of Finance. This is unexpected, given that in the beginning of the year the Ministry of Finance announced the sequester expenditures (Minister of Finance Anton Siluanov estimated the potential savings to more than 500 billion rubles.), and until recently, it was expected that the sequester will be implemented in 10% brief limits of the so-called unprotected articles.

The result is a revised budget deficit in 2016 will be not of 2.36 trillion, as of 3.03 trillion — nearly 700 billion rubles more than planned in the current budget law. As said Anton Siluanov, the deficit will amount to 3.7% of GDP (3,66% of GDP on the basis of the project of the Ministry of Finance). Initially, President Vladimir Putin set the task to meet the 3% of GDP — this figure is spelled out in the law on the budget, and in July Siluanov predicted 3.3 percent.

Increased to 674 billion rubles, the deficit will be financed by additional domestic borrowing, the limit which the Finance Ministry proposes to raise from 300 to 500 billion rubles, as well as by the article entitled “other sources of internal financing of the deficit,” the application to the bill. In the “other sources” include revenues from privatization of state-owned companies and exchange differences on the Federal budget.

The Finance Ministry now expects to cover almost 190 billion rubles at the expense of “other sources” (in the current budget in this line contains a minus 207 billion rubles., planned budget losses). Thus, as of September 1, 2016 “other sources of internal financing of the deficit,” show minus of 71.3 billion rubles, follows from the data of the Federal Treasury, mainly due to negative exchange rate differences to 825 billion rubles from revaluation of foreign currency assets of the Reserve Fund and national welfare Fund. To get an additional 190 billion rubles for “other sources” for the year, you will need either to reduce losses from revaluation reserve funds — and this requires that the ruble has ceased to grow and even got weaker, or significantly increase revenues from privatization.

The Finance Ministry wants to raise from the privatization of 382 billion rubles this year, said on Saturday, TASS with reference to the presentation of the Ministry (September 1, attracted only 67 billion roubles), and on Friday the first Deputy Prime Minister Igor Shuvalov said that the government resumed the privatization of “Bashneft”. Friday following the auction, the government’s stake in Bashneft was worth about 260 billion rubles.