The data on the execution of the federal budhet between january to November 1999 are represented in Table 1. The deflation of the indices was made using CPI. As the table shows, both the level of tax receipts and the overall revenue level in real terms have grown substantially compared with the two preceding months.
For the eleven months 1999 the level of revenues reached 12.7% of GDP ( estimated) ( 10.1% of GDP over the respective period of 1998 and 10.0% of GDP for the whole 1998), including 10.8% of GDP at the expense of tax receipts ( 8.2% and 8.8% of GDP, respectively), and expenditures reached 14.2% of GDP ( 13.2% and 14.5% of GDP, respectively).
As of 1 October 1999, the level of budget deficit was 1.5 % of GDP ( 3.2% of GDP over the respective period of 1998 and 5.4% of GDP for the whole 1998). ( The difference between the dynamics of the deflated indices of budget execution and dynamics of the analogous indices in terms of share of GDP may be attributed to the difference between the dfaltor based on the price index and the GDP deflator).
According to the preliminary data on execution of the federal budget of Russia in 1999, the revenue made up Rb. 598.4 bln. ( 13.3% of GDP), expenditure- Rb. 666.1 bln. ( 14.8% of GDP), and deficit made up Rb. 67.7 bln.
In November 1999, tax receipts to the federal budget from the taxpayers controlled by th Ministry for Taxes and Charges made up a. Rb. 53 bln., and, considering also the revenues of the targeted budget Funds, th execution of the budget made up Rb. 63.5 bln., of which 10.7 bln. falls on RAO “Gasprom”.
Real tax receipts to the federal budget according to the MTC’s data ( prices as of January 1998)
In all, over 1999 the MTC collected Rb. 377 bln., or at 25% more than the amount set in the budgetary task by the government ( Resolution of 30 April 1999 # 477).
The dynamics of the real tax indebtedness in the federal budget is represented in Fig.1. As of 1 December 1999, the over volume of the indebtedness to the federal budget was a. Rb. 246 bln., while the value of the balnced, i.e. with the account of tax overpayments to the reached Rb. 1999 bln.
The execution of the consolidated budget between 1998 through 1999 is represented in table 3. As the comparison between the dynamics of tax receipts during the last two years shows, there is no substantial excess of the data for 1999 over the analogous indices for 1998, which may be noted in the course of analysis of the federal budget.
In 1999 consumer price index totalled 36.7%. That corresponds to 2.64% on average per month. In particular, food price index grew up by 35.9%, the non-food price index – by 39.2%, the service price index – by 34.0%. In December 1999 the inflation rate amounted to 1.3%. The CPI increment was caused, primarily, by the growth in food prices – at 1.4%, while prices for non-food commodities grew by 1.1% only, and service prices – by 0.9%.
In Januay 2000 the pace of the CPI growth accelerated. According to preliminary estimates, the inflation rate in the first month of 2000 may reach the level of 3.1–3.4% (44.2–49.4% annualised). This would be the highest value since February 1999. The reason for the price growth is mainly the seasonal factors. The fall in the ruble exchange rate in early-January has not yet affected the domestic prices. Should the RCB keep to the rates of monetary aggregates’ growth (within 18–30% for the year) declared by the Main Principles of Monetary Policy in 2000, the inflation rates will not definitely exceed 25–30%.
The increment of the money base in December 1999 made up 35.5 bln. rubles (from 272.0 to 307.5 bln. rubles), or a 13.05% growth. The evident consequences of a such policy were a sharp rise in balances of commercial banks at correspondent accounts in the RCB (see section IBC Market) and the jump of the ruble exchange rate during the first trading sessions in 2000 (see section Foreign Exchange Market). Between December 27, 1999, to January 10, 2000, the RCB foreign reserves dropped by $400 ml. (see fig. 2 and tab. 1). But the Bank of Russia foreign reserves resumed their growth then (up to $12.8 bln. by 21/1/2000). Nevertheless, the combination of different actions undertaken by the RCB (the recommencement of deposit taking, open market operations) allowed to sterilize the growth of money supply. As of January 24, 2000, the narrow money base amounted to 302 bln. rubles (7.2 bln. rubles less than as of January 10).
The further dynamics of the RCB foreign reserves will be mainly determined by the demand on the part of the RF Ministry of Finance, which needs hard currency to repay the Russian foreign debt. According to the Ministry of Finance, the planned payments in the first quarter of 2000 should make up about $2.43 bln. (according to the schedule – about $3 bln.) (The difference is equal to interest payments on debts to London and Paris Clubs, deferred unless the negotiations on restructuring of this particular part of the former USSR foreign debt are over), namely $1050 ml. in January, $640 ml. – in February, and $740 ml. – in March.
On January 24, 2000, the Russian Central Bank lowered the refinancing rate second for the time over the last one and a half year: from 55% to 45% annualised (see fig. 3). The last time such a low level of the RCB refinancing rate was noted in the first half 1998. That was not a surprise, because the current level of inflation and interest rates at the IBC market has not exceeded 15–20% annualised (the inflation rate in January is not the valid case due to strong seasonal effects). The lowering of the refinancing rate would contribute to a reduction of yields on long-term OFZ, while the upper limit on the level of yields at the domestic market for government securities (doubled refinancing rate) is still in place (The yields of GKO and OFZ matured in 2000 do not exceed 30–40% annualised).
Weekly dynamics of the monetary base and foreign reserves of the RCB between October 1999 to January 2000.
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