Regional Budgets in the First Three Quarters of 2019: Will the Expenditures Decrease?

Alexander N. Deryugin – Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration; Researcher of the Gaidar Institute (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Inter-budget transfers permitted largely to maintain relatively high growth rates of regional consolidated budget revenues amid the reduction of the income base of the corporate profit tax and low growth rates of other taxes. Transfers made up largely for the slowdown of growth in tax and non-tax revenues.

Despite concerns over the probable low level of cash administration of regional budgets, it remained at the average level in the 2011–2019 period.

The slowdown of the growth rates of regional budget revenues, which was expected up to the end of 2019 can affect adversely both future growth rates of regional budget expenditures and the budget balance. In the former instance, it means that it will be necessary to cut expenditures, including those related with the implementation of national projects, while in the latter one it may be required to go beyond the parameters of the agreements with Ministry of Finance of the Russian Federation on the terms of provision of adjustment subsidies, as well as restructuring of the earlier received budget loans.

Key words: consolidated budgets revenues, consolidated budgets expenditures, regional budgets, corporate profits tax, personal income tax, public debt.

Global Oil Market: Main Trends

Yury N. Bobylev Head of Mineral Sector Economics Department of the Gaidar Institute; Leading Researcher of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Implementation of OPEC+ oil output cut agreements has led to stabilization of the world oil prices in the $60–70 per barrel range. In H2 2019, the oil prices pushed closer to the lower bound of this range. In December 2019, members of OPEC+ decided to cut further the oil production from January 1, 2020. Amid growing oil production seen in the countries outside the cut deal such measure should prolong stabilizing effect on the oil market and prevent a significant price slump.

Key words: oil, prices of oil, OPEC+.

Moscow-Kazan: How Transport Projects Modify the Economic Geography

Tatyana N. Mikhailova – Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences, Associate Professor (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Regional countable models represent a traditional method of evaluating the long-term economic effects of transport infrastructure projects. The countable model of economic geography for municipal administrations of the Russian Federation developed by the experts of the Institute of Sectoral Markets and Infrastructure (ISMI), RANEPA was used for evaluating the effects of construction the planned Moscow–Kazan highway. The model demonstrates that the project will stimulate both growth of average wages and influx of population not only directly to the arears where the motorway is going to be built, but in a number of other territories of the Volga Region.

Key words: transport, traffic network, infrastructure, economic geography, Moscow–Kazan.

Russia’s Foreign Trade in 2019: Preliminary Results

Alexander Yu. Knobel – Head of Foreign Trade Department of the Gaidar Institute; Director of Center for Foreign Trade Department of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Alexander S. Firanchuk – Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Over the course of the first ten months of 2019, Russia’s exports of fuel and energy resources in money terms dropped relative to the same period of the previous year by 8.1%, to $ 217.4bn (or 77% of the pre-crisis level registered in 2013). The value of other exports declined to $ 128.0bn (-1.9%), thus returning to its pre-crisis level (105%). The drop in the value of Russia’s exports of fuel and energy resources, metals, chemical products, and timber was caused by a considerable deterioration in pricing which took place against the background of relatively stable export volumes. The export of high-tech products (the commodity groups Machines and Equipment and Other Commodities’) remained unchanged.

Over the course of the first ten months of 2019, the value of imports amounted to $ 198.8bn, thus remaining at the level of the corresponding period of the previous year (100.8%). One of the factors behind the ruble’s return to about 77% of the pre-crisis level registered in 2013 was the significant strengthening of the ruble.

Key words: foreign trade, export, import, rate of exchange.

Creation of Internal Crisis Predictors: Russian Financial Conditions Index

Yury A. Danilov – Leading Researcher of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Danil A. Pivovarov – Researcher of the Russian Presidential Academy of National Economy and Public Administration (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Igor S. Davydov – Junior Researcher of the Russian Presidential Academy of National Economy and Public Administration (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The article discusses the issues of creating crisis predictors based on indicators of the domestic financial market of the Russian Federation. The authors constructed and tested on historical data the Russian Financial Conditions Index, which in a number of specifications showed a 2-quarter lead relative to the dynamics of real GDP. This index is based on the experience of the formation of similar indicators in the USA, where they showed good predictive properties relative to recessions. The creation of a similar Russian indicator is based on objective grounds for the presence of predictive properties of indicators built on the basis of data from the Russian financial sector.

Key words: financial conditions index, financial stress index, crisis predictors, predictive properties, financial sector, financial markets, GDP dynamics.

Rate of Inflation: The Results of 2019

Alexandra V. Bozhechkova – Head of Monetary Policy Department of the Gaidar Institute; Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration, Сandidate of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Pavel V. Trunin – Head of Center for Macroeconomics and Finance of the Gaidar Institute; Leading Researcher of the Russian Presidential Academy of National Economy and Public Administration, Doctor of Economic Sciences (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

In 2019, a considerable slowdown of the rate of inflation resulted in substantial cuts in the key interest rate. Within that year, the Central Bank of Russia reduced it five times (from 7.75% to 6.25% per annum) to the level it perceived neutral. By our estimates, early in 2020 the inflation rate will be falling and may decline below 2% year on year, so the Central Bank of Russia is likely to keep easing the monetary policy. However, by the end of the year as a result of growth in budget expenditures and recovery of domestic demand the growth rates of the consumer price index (CPI) may return to the level of 3.5%–4%.

Key words: inflation, basic inflation, annual inflation, prices, consumer prices, monetary policy, key interest, rate, target, Bank of Russia.

Survey of Current Business (November 2019 - February 2020)

Sergey P. Aukutsionek – Head of Center for Transition Economy Studies, Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Andrey S. Yegorov – Senior Researcher of the Center for Transition Economy Studies, Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Tatyana V. Serzhantova – Senior Researcher of the Center for Transition Economy Studies, Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Stanislav V. Belyakov – Researcher of the Center for Transition Economy Studies, Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

In November 2019, the diffusion index of output prices turned out to be rather low (46). The diffusion index of finished goods inventories increased by 12 percentage points and equaled to 50. The diffusion index of three-month expectations of the order-book level increased by 10 points.

Among the factors restraining investment, once again “high prices for equipment and construction” were the main obstacle for the majority of respondents. Whereas the “deficit of financial resources”, which had once stably occupied the first position, moved to the second place.

Key words: Russia, industry, industrial enterprises, price level, wages, employment, output, investment, indebtedness to banks, order-book level, stocks of finished products, capacity utilization rate, financial situation, production restrictive factors.

Influence of Petroleum Products Excise Increase on Budget Revenue

Dmitry S. Gordeev – Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration; Senior Researcher of the Institute of International Economics and Finance, Russian Foreign Trade Academy, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

In this paper influence of petroleum products excise increase on budget revenue are analyzed. Author shows that in short term budget revenue based on excise and mineral extraction tax will increase, but in long term budget revenue will be neutral to negative, as consumption of gasoline is elastic to price.

Key words: petroleum products, excise, gasoline, transport, tax maneuver.

Russian Industry in December 2019

Sergey V. Tsukhlo – Head of Business Surveys Department of the Gaidar Institute, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The slowing demand momentum and increasing excess stocks of finished products were the reason why, in December, industrial enterprises had to resort to more aggressive output cuts, as stated in the business survey findings. However, the demand forecasts and production plans in the last month of 2019 displayed the same optimism level as before. Industry demonstrated higher concerns in connection with the cost of machinery and equipment, and appears to be less concerned than before with the current macroeconomic situation’s predictability. According to enterprises, industry needs to be protected from competing imports. The credit-related issues, from the point of view of the investment plans of industrial enterprises, are relatively unimportant.

Key words: Russian industry, demand, output, employment, finished goods inventory, industrial lending, personal, investments, actual changes and expectations.

Results of Budget Implementation during the First Nine Months of 2019

Tatyana V. Tischenko – Senior Researcher of the Gaidar Institute; Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Sergey G. Belev – Head of Budget Policy Department of the Gaidar Institute; Senior Researcher of the Russian Presidential Academy of National Economy and Public Administration (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Based on the results of January-September 2019, the dynamics of the main parameters of the federal budget have revealed the following as compared to the same period of the previous year:

  • there is a stabilization of the revenues at the level of 18.8 p.p. of GDP; at the same time the reduction of the level of oil-and gas revenues was made up for by growth in VAT-related revenues;
  • the reduction of oil-and gas revenues was mainly caused by the application of exemptions in respect of excisable goods of some types of oil stock;
  • though growth in VAT-related revenues was feasible owing to raising of the main key rate, the former failed to result in a serious reduction of the taxable base;
  • with the expenditures reduced by 0.3 p.p. of GDP, the budget surplus increased to 3.8% of GDP, which situation can be explained mainly by lagging behind of cash administration across all the functional budget articles, except for inter-budget transfers.

Key words: federal budget, taxes, revenues, oil and gas revenues, non-oil and gas revenues, expenditures, state foreign debt.

Economic Sanctions on Russia and Reciprocal Embargo Related Works Review

Kniaz M. Bagdasaryan – Researcher of the Russian Presidential Academy of National Economy and Public Administration (Moscow, Russia). Е-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The article reviews publications of domestic researchers on the analysis of trade and political restrictions introduced against the Russian Federation in 2014, as well as retaliatory measures as an embargo on imported food products from the countries of the European Union and several other states. The analysis revealed that approaches to the quantitative and qualitative assessment of benefits and losses vary significantly, and sometimes have a subjective character, based on the professional specialization of researchers and their political and economic views.

Key words: economic sanctions, counter-sanctions, food embargo, import restriction, devaluation of the ruble.