Russia's Audit Chamber voices doubts over budget forecast

The forecast does not state whether the European Union's plans to impose an oil embargo against Russia had been considered, while the hypothesis that the rouble rate will remain largely stable, has led to an overly optimistic estimate of budget revenues from foreign trade, the chamber said. It added that the finance ministry's plans to raise 9.33 trillion roubles in domestic borrowing in the next three years, including 2.51 trillion roubles in 2023, may not be met.

Russia's Audit Chamber on Monday expressed doubts over the feasibility of the government's budget forecast for 2023-25 being met, warning that sanctions and uncertainty may stifle consumer demand and borrowing. Russia's draft federal budget is based on the economy ministry's three-year forecast, which envisages the economic recovery picking up in 2023, driven by an uptick in consumer demand, and with several indicators, including GDP and industrial production, seen turning positive by 2024.

The audit chamber, in a cache of documents published on Monday, said that some of the main risks, such as the possibility of developed countries falling into recession and tougher sanctions being imposed against Russia over its actions in Ukraine, had not been taken into account in the forecast. The chamber estimated that the treasury is at risk of a 2-trillion-rouble ($32.36 billion) shortfall of income in 2023-25, primarily due to VAT revenues.

"Under conditions of high uncertainty, the population may show a more restrained position in using credit and their savings for consumption, than was seen, for example, in 2020 during the pandemic," the chamber said. The forecast does not state whether the European Union's plans to impose an oil embargo against Russia had been considered, while the hypothesis that the rouble rate will remain largely stable, has led to an overly optimistic estimate of budget revenues from foreign trade, the chamber said.

It added that the finance ministry's plans to raise 9.33 trillion roubles in domestic borrowing in the next three years, including 2.51 trillion roubles in 2023, may not be met. The audit chamber, headed by former finance minister Alexei Kudrin, is a state body that monitors how effectively and efficiently budget funds are being used. ($1 = 61.8000 roubles)

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