Russian fiscal deficit likely to surpass 3.7 pct of GDP this year, says Finance Minister

Russia’s Finance Minister Anton Siluanov stated yesterday that the budget for 2016 might surpass 3.7 percent of GDP, thanks to the carry overs from 2015 not being used. According to Siluanov, the carryovers worth RUB 200 billion might be used for 2017 instead, providing additional fiscal space to the Russian government.

Russia’s fiscal deficit is unlikely to improve significantly in the coming years, according to Commerzbank. For Russia, 2018 is an election year and it is unlikely that the government would have an interest in executive severe austerity policies before the election period.

There is likelihood that Russia would have issue additional debt in the years ahead, which is likely to be primarily RUB denominated rather than USD denominated, added Comerzbank. RUB debt issues year-to-date were quite oversubscribe and are unlikely to see any change.

Meanwhile, yesterday the nation’s industrial production report for the month of September was released that indicated that output dropped more than expected in the month. According to Russian Federation State Committee on Statistics report, the nation’s industrial production contracted 0.8 percent in September seasonally adjusted month-on-month, as compared with the 0.7 percent growth recorded in August.