Russian Finance Minister Siluanov Assures Funding for Defense and Technology Amid Economic Growth

Siluanov, the Finance Minister, expressed confidence that there will be sufficient funds allocated to various priority areas, ranging from defense to technology. The Ministry of Finance has projected a 2% economic growth for 2023, along with a planned budget deficit.

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Siluanov highlighted the positive trend in oil and gas revenues, which has allowed for the accumulation of funds in the National Welfare Fund. He expects economic growth to exceed 2% by the end of the year, contrary to his previous prediction of 2.5% in August.

The Finance Minister emphasized that the Russian budget caters to all priority sectors, including national security, army readiness, regional integration, social welfare, and technological advancements. Siluanov’s statements were quoted by the Ministry of Finance’s press service.

He further noted that non-oil and gas revenues, such as turnover taxes and income tax, have remained consistently positive, matching the levels of the previous year and 2021. The monthly dynamics of oil and gas revenues have also surpassed their base size, allowing for the accumulation in the National Welfare Fund.

Siluanov highlighted the improving budget situation, which enables the prediction of a 2% deficit for the year, as outlined in the budget. He assured that the budget accounts for the normalization of fiscal policy, with a gradual reduction in the structural deficit expected to align with the budget rule parameters by 2025.

In 2022, President Vladimir Putin approved a three-year budget that includes a deficit of 2% for this year, with a subsequent reduction by 2025. The budget allocates increased spending on defense and security, amounting to over 9 trillion rubles or 32% of the total.

Siluanov previously expressed uncertainty regarding the deficit level for this year, as it depended on additional costs. The budget deficit reached a record level at the end of March, surpassing the annual target of 2.93 trillion rubles with 3.3 trillion rubles. Prime Minister Mikhail Mishustin attributed this to advanced financing.

However, as of the first half of the year (January-July), the deficit decreased to 2.6 trillion rubles. The Ministry of Finance observed a return to normal expenses and growth in non-oil and gas revenues.

Maxim Oreshkin, former head of the Ministry of Economic Development and presidential aide, suggested the possibility of a budget surplus as early as 2024. The three-year budget includes a deficit of 1.4% of GDP for next year. Oreshkin explained that this year’s budget revenues align with the highest forecasted levels, particularly emphasizing the positive results in non-oil and gas revenues.

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