Moscow. April 11. INTERFAX - Both the formation of the federal budget and its execution in Russia has never been a routine process. And at the present stage, an ever-growing list of tasks and their final "price tag", even against the background of generally favorable conditions in foreign markets, force the government to look for new profitable sources, sometimes quite non-trivial. Finance Minister Anton Siluanov told Interfax in an interview about how to maneuver in these changing conditions and what risks there are for the budget now.
- A new budget cycle has started. For the second year in a row, the budget begins to be executed with a significant deficit, although in the past the first months of the year were characterized by a surplus. At the same time, a significant deficit occurred in February. What is the reason for the active advance payment? Is this now the new norm for budget execution at the beginning of the year?
- We have often been criticized that a significant amount of budget spending falls on December...
- But last December, the expenses, despite the large-scale advance payment at the beginning of the year, were very significant.
- They have become smaller - 17% of the annual budget, before it was 23-24%. In other words, the uniformity of budget spending has improved significantly in the past year. The reason for the large deficit at the beginning of last year was the active advance payment.
This year it is ordered. An advance payment in excess of 30% requires justification. It is necessary to monitor such an advance. This is the task of both the Ministry of Finance and industry departments. If the money is in the account and is not used, then this is an inefficient use of it.
This year, January passed with a minimum advance payment. In February - March, spending became more active, but in general the situation is planned, without spikes. The dynamics of budget execution is better than in previous years. Currently, the budget deficit is expected to be 1.4 - 1.5 trillion rubles. The execution parameters are within the planned expectations.
- Last year, the deficit in nominal terms, according to preliminary data, was higher than the planned 2.9 trillion rubles and amounted to 3.24 trillion rubles, although relative to GDP it fell within the approved 2%. This year, the deficit is planned to be half as much - 1.6 trillion rubles, or 0.9% of GDP, and revenues are expected to be almost 6 trillion rubles higher than those received last year (35.065 trillion versus 29.12 trillion). This is an increase of about 20% compared to 4.7% in 2023. Do you see any risks in the execution of income at this level? Is there any confidence that it will be possible to keep the deficit within the planned parameters?
- The budget law provides for an increase in federal budget revenues by 5.9 trillion rubles, or 20%. At the same time, a significant part of this increase is the projected growth in oil and gas revenues (+2.7 trillion rubles) - as a result of the projected dynamics of energy prices, the exchange rate and taking into account adjustments to legislation in the oil and gas sector. Possible risks in terms of oil and gas revenues are mitigated by the application of the "budget rule". Current expectations for the year confirm previously made forecasts.
Non-oil and gas revenues are projected to grow by 3.2 trillion rubles, including through one-time large transfers in 2024. This is the return of a transfer from social funds related to previously granted deferrals on insurance premiums, increased export duties on a wide range of products, etc. The growth of such revenues is associated with an increase in receipts of key tax payments, primarily VAT and other turnover taxes (in total about 1 trillion rubles).
The dynamics of macroeconomic parameters and the first results of budget execution by revenue allow us to speak about the absence of significant risks in terms of income.
- Does your forecast for oil and gas revenues take into account the risks of additional measures in terms of the "price ceiling", some kind of tightening of sanctions or their implementation regime?
- Despite the strengthening of secondary sanctions by Western countries during 2023, we expect oil and gas revenues to arrive within the framework of the plan. We coordinate oil production and export volumes with OPEC countries.
- But are there any fears that discounts may return to the values that were at their peak last year?
- Exporters have established supply chains. Oil prices are decent now, at $90 per barrel - even taking into account discounts, they will make it possible to fulfill plans for oil and gas revenues.
- Budget expenditures have been growing quite rapidly in recent years. This year is no exception - compared to the execution of 2023, expenses, according to the law, increase by 13%. You said last year that there is nowhere to increase costs further, and you need to work hard to prioritize them. In the middle of last year, there was a discussion about this, and it was not just about the traditional redistribution of part of the costs, as happens every year within the framework of budget execution, but about something more substantial. Do you still think that there are serious reserves for reallocation of expenses? Could standard prioritization result in something bigger this year?
- Prioritization of expenses should be done constantly. We will continue to do this. But this does not mean that it is necessary to do this every year during the execution of the budget. We are well aware that contractual obligations have been accepted in the budget, agreements have been concluded with the regions for a three-year period.
Nevertheless, in order for the budget to be "in good shape", optimization is needed. To do this, the government has a commission for optimizing budget expenditures. We look at which expenses are important and which are not so important.
Will there be any serious optimization proposals this year? It is correct to do this while working on a new budget for three years, to assess what works and what does not, taking into account new priorities. Life goes on, new goals are being set. The task of the Ministry of Finance is to ensure that the budget responds promptly to today's tasks and quickly adjusts to new priorities.
The social obligations of the State will be fulfilled as a matter of priority. There are funds for these purposes and they will not be reduced.
- According to your preliminary expectations, in the 2025 budget, the amounts of income and expenses will change compared to what is currently included in the three-year budget for next year?
- They will change. It is necessary to take into account the instructions following the results of the president's address. It is financially capacious...
- How capacious is it?
- These are not small volumes. The government is preparing calculations, but this is an amount exceeding 1 trillion rubles annually. Therefore, additional money is needed.
- One of the obvious sources of resource provision is changes in the tax system. What are the main adjustments being discussed?
- The President set tasks on the fairness of the tax system, the focus on stimulating investments, ensuring the sustainability of budgets.
- What does justice mean in this case?
- Fairness means that those who earn more pay more, and it is also very important that there are fewer opportunities to evade this obligation, so that there are fair levels of tax burden.
- So we are still waiting for some changes in the personal income tax scale?
- No comments yet. Proposals on the tax system will be worked out with the parliament. There are initiatives of the deputy corps on personal income tax, business on taxes, there is something to work on, something to discuss.
- Let's talk about the budget rule, which is amended almost annually. Is there a chance that no amendments will be proposed this year, or may they be required again? Perhaps in terms of the cut-off price, increasing the flow of oil and gas revenues to the budget? Or does the current structure with a price of $60 per barrel look balanced and appropriate for both budgetary needs and the need to replenish the National Welfare Fund? In your opinion, how stable is the construction of the rule in the current conditions?
- I don't want to repeat the situation of the 2000s, when the cut-off price was first set at $20 per barrel, then rose to $27, $30, $50, until it reached more than $100. We have already weakened the rule - the price of oil for calculating basic oil and gas revenues according to the original rule should be at the level of $45-46 per barrel today, and now it is $60 per barrel. There was logic in the cut-off price of about $40 - the cost of shale oil production just around $40 fluctuated on average. And $60 is a fairly marginal level.
Will there be proposals for easing? The Ministry of Finance will not be able to support them. Because the role of the budget rule is important for the sustainability of the budget, for the predictability of expenditures. Starting next year, we plan to enter the primary balance sheet without using the NWF. It is very important. Last year, the budget was executed with an increase in expenses and income in the amount of more than 3 trillion rubles, but the deficit remained within the planned values - less than 2% of GDP. This made it possible to ensure macroeconomic stability and, along with the actions of the Central Bank, to prevent an uncontrolled increase in inflation. This should be done further.
If you look at Western countries, they are moving away from their fiscal policy rules. As a result, debt and inflation are rising, and the economy is stagnating. We cannot allow this to happen. We have a small debt - according to updated data, 15% of GDP...
- You are often called upon to increase it...
- Why is it impossible to raise the level of public debt at such a pace as some experts suggest? Because our public debt servicing costs are high - look at the rates on the market. For example, in 2019, debt service expenses accounted for 3.6% of total income, in 2024 they will increase to 6.5%, and in 2026 they may grow to 9.7%.
Secondly, the liquidity of the market has decreased due to the departure of foreign investors. The rates on our bonds have increased. Now 10-year securities are bought at 13.4% per annum. It is expensive.
To carry out uncontrolled borrowing means not to see the prospect of what this may lead to.
- For 2024, the Ministry of Finance has a rather strenuous borrowing program - 4.1 trillion rubles. At the same time, from the point of view of the effectiveness of auctions for the placement of OFZ, the year began quite cheerfully. And if earlier banks were primarily interested in floaters, now we see significant volumes on classics alone. What is the reason for this, profitability?
- of course. Floaters are linked to the value of money on the market, which is currently hovering around the key rate of 16%. Therefore, it is more expensive to borrow at a floating rate today. The share of floating-rate securities in our issues is about 50%, which indicates the risks to the budget with changes in market rates. Predictability is important for the budget, although you have to pay for it.
- So you have no concerns about the implementation of the borrowing program this year? Last year, you were able to reduce it by 1 trillion rubles due to the external environment and income, and this year you may not have such luck ...
- We will do it. The plans for the first quarter have been fulfilled, and we will continue to work taking into account market sentiment.
- And what about the replacement of sovereign Eurobonds?
- We're cooking. We have solutions.
- And what does it all come down to, if there are solutions?
- We are working out issues with the Central Bank.
- Last year, against the background of the influx of corporations towards the end of the year and the expiration of the deadline, the Ministry of Finance said that it did not want to interfere, load the infrastructure with its replacements. Now the new deadline for corporations is the end of June. Is the Ministry of Finance also aiming for the first half of the year, or will it wait again for corporations to be replaced, and then it will enter the free market?
- In general, the principle of substitution is planned to be the same as that of corporations. Will we be able to meet the deadline in the first half of the year? I think so.
- You recently spoke about the need to increase revenues from privatization this year from 1 billion rubles to 100 billion rubles. Could you tell us in more detail what assets we can talk about, despite the fact that all "classic" privatization proposals are traditionally torpedoed by relevant departments?
- Yes, classical proposals are hard to discuss. There is potentially a lot of money there, these are key companies where it would be possible to reduce the state's share to at least a controlling stake.
Where do 100 billion rubles come from? These are the assets that are transferred to the treasury by court decisions. These assets should be sold. If you look at their cost, we will gain 100 billion rubles, and maybe more.
- And how realistic is it to start selling this year?
- The tasks of the Federal Property Management Agency have been set. We are working.
- The proposals of the Ministry of Finance on the privatization of large assets, which you mentioned at the end of last year, affect about 30 positions. This list is not public, but it is clear that these proposals are as ambitious as possible, the names there are serious and there will always be resistance to them. Why did you decide to make such an offer right now?
- It is clear that now the state needs money for economic development. They can either be borrowed at a high interest rate on the market, or they can sell assets and invest in the development of new technologies, thus obtaining new assets or support for industries that are critical for the country. Therefore, it would be strange if the Ministry of Finance did not make such proposals. This is our job.
- That is, so that no one thinks that you do not see such opportunities at all?
- It all depends on determination. You can sell some of the assets while retaining a controlling stake. You can completely exit if these are not systemically important enterprises. These issues need to be resolved. And 100 billion rubles will be accumulated this year.
- Is it on newly acquired assets?
- yes.
- Is there a chance for any major deals in the "classic" privatization? Reduction of the state debt in VTB, sale of the package to DOM.RF"...
- "THE HOUSE.Russia" is a realistic option. But this will not be a sale, but an additional issue.
- That is, an IPO?
- yes.
- The state has another asset, which, however, is clearly not up to privatization now - Rusnano. Are you ready to consider providing state support in order for the company to cope with its debts?
- Rusnano fulfills its obligations on debts. Then it will be so, the obligations will be fulfilled. Both those that are provided with state guarantees and those for which there are no guarantees.
- The funds of the National Welfare Fund are being actively directed to various investment projects, last year it was about 1.1 trillion rubles, this year the amount is also expected to be within 1 trillion rubles. Is there a chance that it will increase, since there is a feeling that companies are quite actively trying to get some kind of support from the NWF? To what extent is the Ministry of Finance ready to provide it, or will it still be kept within the planned parameters?
- The list of investments of the NWF is defined, the law provides for the possibility of allocating a total of 4.25 trillion rubles for such projects. There are different assets there. The position of the Ministry of Finance is that it is necessary to work within this value, because the budget should have a safety margin in the form of the NWF. There are a lot of expenses now. Such a reserve should be at least 7% of GDP, and now it is lower. Under the conditions of adjusting the budget rule, the filling of the fund is slower.
- Can there ever be talk of tightening the rule compared to the current version? Is there such a prospect that one day we will move the cut-off price lower and save more, or is this still not visible in our long-term prospects?
- While the topic is not being discussed, the main thing now is not to change approaches to the budget rule.
- The mandatory sale of foreign currency earnings, introduced last autumn, was declared as a temporary measure. Now it is proposed to extend it until the end of the year. Is that all?
- The government has made proposals for an extension until the end of 2024, while no decision has been made.
- The Central Bank stated that transactions "for the exit" of foreigners in December put pressure on the ruble exchange rate. It turns out that many buyers with large volumes for these transactions entered the market at the same time, but after all, these processes are regulated by a subcommittee, there is a general limit and other restrictions, it turns out that something did not work? Do I need to lower the limit?
- The limit is $1 billion per month, we are meeting it. There were almost no major deals this year, with the exception of Yandex. Small companies are leaving now. Therefore, yes, in the past the influence was strong, now a limit has been set, and we are working within this limit.
- And there is no need to change it accordingly?
- No, we are not planning to.
- In September, Presidential decree No. 665 was published, which, among other things, allowed the use of funds credited to accounts of type "I" as part of payments on Eurobonds of the Russian Federation to holders whose rights are accounted for by foreign depositories to make settlements on blocked foreign securities owned by Russians - now investors already receive dividends under this scheme and coupons. How did the idea arise to use funds from accounts of type "I" for payments on blocked securities?
- This is a joint idea of the Ministry of Finance and the Central Bank. We have to support our investors. And we will continue to do this.
- The President of the Russian Federation instructed to extend the family mortgage program until 2030 while maintaining a number of basic parameters, but will something change? What conditions does the Ministry of Finance plan to offer?
- For family mortgages for families with children under six years old, all program parameters will remain, and for families with children over six years old, we are preparing proposals. The task of creating incentives to improve housing conditions for families with children remains. The usual preferential mortgage ends in July. All decisions will be made by July.
