Russian budget deficit narrows to $42 bln after slight surplus in May

The finance ministry stopped publishing individual monthly budget fulfilment data last year, but based on Tuesday's figures, Russia posted a surplus in May of 13 billion roubles ($159.8 million). That compares with a 1-trillion-rouble deficit in April.

Russia recorded a marginal budget surplus in May to slightly rein in its deficit for the first five months of the year to 3.41 trillion roubles ($41.9 billion), the finance ministry said on Tuesday, as monthly spending slowed. In Jan-May 2022 Russia posted a surplus of 1.59 trillion roubles, but significant outlays to support its military campaign in Ukraine and a barrage of Western sanctions on its oil and gas exports have hit government coffers since then.

Soaring defence spending has kept Russia's industrial sector ticking along, spawning forecasts for economic growth this year and helping Moscow to plough on with its military campaign in Ukraine. The finance ministry stopped publishing individual monthly budget fulfilment data last year, but based on Tuesday's figures, Russia posted a surplus in May of 13 billion roubles ($159.8 million).

That compares with a 1-trillion-rouble deficit in April. Monthly spending in May was its lowest this year, 1.1 trillion roubles lower than in April. Meanwhile, non-oil-and-gas revenues for Jan-May were 9.1% higher than the same period last year. But Moscow's crucial oil and gas revenues were 49.6% lower year on year in Jan-May, which the finance ministry put down to lower prices for the Urals oil blend and lower natural gas export volumes.

Spending was 26.5% higher year on year in that period, the preliminary data showed, while income was down 18.5%. Finance Minister Anton Siluanov has repeatedly said Russia's budget deficit this year would be no more than 2% of GDP, although most analysts disagree. The International Monetary Fund is among those expecting Russia to see a sharply wider budget deficit this year.

The finance ministry on Tuesday said it expects tax revenues from the oil sector to recover in the second half of the year. ($1 = 81.3705 roubles)