Russia's State Budget in 2014

Russian Economy in 2014. Trends and Outlooks. (Issue 36), 2015

14 Pages Posted: 1 Nov 2015 Last revised: 10 Apr 2017

See all articles by Sergei Belev

Sergei Belev

Russian Presidential Academy of National Economy and Public Administration (RANEPA) - Institute of Applied Economic Research; Gaidar Institute for Economic Policy

Arseny Mamedov

Gaidar Institute for Economic Policy

M Deshko

Gaidar Institute for Economic Policy

Evgenia Fomina

Gaidar Institute for Economic Policy; Russian Presidential Academy of National Economy and Public Administration (RANEPA)

Date Written: October 31, 2015

Abstract

In 2014, Russia’s budgetary sphere was operating under the cumulative influence of several negative factors. A further slowdown in the national economy’s growth rate to 0.6% (vs. 1.3% in 2013) occurred due to the declining prices of oil in the second half-year of 2014. The average annual price of Urals in 2014 dropped to $97.6 vs. $107.9 per barrel in 2013. At the same time, it is necessary to emphasize that the slowdown in the Russian economy had first been noted during an earlier period, while oil prices had been even higher, and so this was by no means a decisive factor of economic development. However, for the budgetary system, and primarily from the point of view of the ‘oil and gas’ component of federal budget revenue, it was the price of oil that became the key determining parameter. As for the negative factors that the economy has been faced with, it is also necessary to point to the economic sanctions introduced against Russia from the spring of 2014 by the West, as a result of which investment activity declined and borrowed funds became far less easily obtainable. All these factors produced a negative effect on the growth rate of revenue inflow in the RF budgetary system. As estimated by the RF Ministry of Finance, Russia’s loss of federal budget revenue in 2014 amounted to $150bn as a result of the downward movement of prices for oil, and to about $50bn due to the economic sanctions. It is only thanks to the relatively high prices for energy carriers in the international raw materials markets over the period of January-June 2014, when the price of Urals never dropped below $106 per barrel, that the execution of budget revenue resulted in no shrinkage in the volume of receipts, neither in absolute nor in relative terms. Besides, another factor that conduced to increasing receipts was the decline of the ruble’s foreign exchange rate, which in part compensated for the downward movement of oil prices over the second half of the year. On the whole over that year, the ruble-to-USD exchange rate rose from 33.5 in January to 55.5 in December 2014.

Keywords: Russian economy, budget parameters, budgetary system, budget outlays, revenues, public debt

JEL Classification: E62, H20, H50, H61, H70

Suggested Citation

Belev, Sergei and Mamedov, Arseny and Deshko, M and Fomina, Evgenia, Russia's State Budget in 2014 (October 31, 2015). Russian Economy in 2014. Trends and Outlooks. (Issue 36), 2015, Available at SSRN: https://ssrn.com/abstract=2684413

Sergei Belev

Russian Presidential Academy of National Economy and Public Administration (RANEPA) - Institute of Applied Economic Research ( email )

Russia

Gaidar Institute for Economic Policy ( email )

3-5 Gazetny Lane
Moscow, 125009
Russia

Arseny Mamedov

Gaidar Institute for Economic Policy ( email )

3-5 Gazetny Lane
Moscow, 125009
Russia

M Deshko

Gaidar Institute for Economic Policy ( email )

3-5 Gazetny Lane
Moscow, 125009
Russia

Evgenia Fomina (Contact Author)

Gaidar Institute for Economic Policy ( email )

Gazetny Lane 3-5
Profsouyznaya street
Moscow, 117485
Russia

Russian Presidential Academy of National Economy and Public Administration (RANEPA) ( email )

Vernadskogo Prospect 82
Moscow, 119571
Russia

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