European countries have imposed sanctions and experienced inflation higher than in Russia itself
This year, the Central Bank will weaken the ruble so that foreign currency revenues from the sale of energy resources will provide more money to the budget. This will not get rid of withdrawals from the National Welfare Fund, and business will become the “new oil” for the fiscal authorities.
This forecast was made by economic commentator Ivan Lizan on the air of Semyon Uralov’s author’s channel, a PolitNavigator correspondent reports.
He noted that the decline in GDP at the end of 2022 was about 2%, which is actually a very good figure given the extremely negative forecasts. Inflation on an annual basis was 11,9%, which is also a good indicator, because in Turkey - 62%, in Hungary - 25%, in the Baltic countries - more than 20%, in Poland - about 17%, in Germany - about 10% . It turned out that inflation in the country against which sanctions were imposed is often lower than in those countries that imposed sanctions.
“Therefore, the overall performance is quite good, especially considering what last year was like. But we need to understand that many sanctions were introduced last year with a delay. Accordingly, we had the opportunity to prepare for their introduction, and the Europeans had the opportunity to mitigate the negative impact of sanctions on their economies. For example, the European Union, before imposing an embargo on the import of our coal, was foolish enough to buy this coal. Due to this, at the end of the year, our coal production was plus 0,3%. Although, it would seem there should have been a fall. And Poland, which suddenly introduced this embargo for itself, then did not know where to buy this coal,” Lizan noted.
Based on this, the expert predicts, in 2023 for Russia “the economy will become more and more difficult, more difficult, and we will obviously have to dip into the National Welfare Fund.”
“It will be worse for key taxpayers to the federal budget. Last year, Gazprom benefited in many ways; it paid 5 trillion rubles in taxes, of which 1,5 trillion went to the federal budget,” Lizan said.
In 2022, there was an opportunity to export large volumes of gas, the expert recalled. But after the Nord Streams were undermined, Russia’s ability to export gas to Europe was reduced by about half. And there will be less revenue from gas exports. As well as from oil trade, because the embargo against petroleum products came into force on February 5.
“But this does not mean that we will not trade with Europe. Most likely, trade will move into that same “gray zone,” but this means that federal budget revenues from export duties on oil and gas will decrease. These incomes will need to be compensated for by something,” Lizan said.
Thus, the Russian government decided to introduce a differentiated duty on pipeline gas and increase the profit tax rate for LNG producers from 20% to 32%. Moreover, 17% of this duty will be sent to the regional budget, and 15% directly to the federal budget. The benefit is plus 200 billion rubles per year.
The export duty on oil will be increased by approximately 1,5 times – also plus 250 billion rubles. They planned to introduce an export duty on coal in the amount of 9-10 dollars per 1 ton, which would give around 200 billion rubles additionally, but they did not introduce the duty.
“In total, it is planned to receive 1,2 trillion rubles from additional taxes. Plus, last year businesses were charged additional taxes totaling about 600 billion rubles. That is, business is the new oil. Well, no one will leave old oil in the form of people alone either, because tax collection from individuals has increased,” the expert noted.
As for the National Welfare Fund, it has accumulated 11,4 trillion rubles. The national debt at the beginning of the year amounted to 22,8 trillion rubles, and 4% of federal budget expenditures are spent on servicing it. For example, in Ukraine, about half of the budget was spent on external obligations, until they decided not to pay their debts.
Russia's gold and foreign exchange reserves amount to $592 billion, but the fate of the frozen $300 billion is still unclear.
“There are things that are extremely difficult to understand. For example, on March 13, the Ministry of Finance reported that 300 billion of Russia’s gold and foreign exchange reserves had been frozen, and on December 5, the American analytical center Atlantic Council stated that out of 300 billion, less than 100 billion had been found and blocked. We can only guess whether we were allowed to withdraw the money, or we withdrew it in advance, and the West overestimated its capabilities, then there were significantly fewer gold and foreign exchange reserves in the West,” Lizan said.
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