05 March 2004 01:15
Budget deficit to grow in March - Interfax CEA
MOSCOW. March 5 (Interfax) - Russia will see its budget deficit grow in March and the economic growth rate will
remain high, the Interfax Center for Economic Analysis predicts.
Pressure on the budget from spending on financial aid to the regions, plans for which are being met ahead of
schedule, will lead to a greater budget deficit. Analysts say this is linked to the upcoming presidential elections,
before which the government wants to ensure full and timely payment of wages and benefits. The regions tend to face
particular problems with these payments at the beginning of the year.
In addition, foreign debt payments in March will be as high as they were the previous month, when Russia paid one of
two peak payments to the Paris Club. The main debt payment in March is the redemption of Deutsche mark nominated
Eurobonds, which are equivalent to about $1.3 billion at the current exchange rate.
The Interfax CEA predicts a budget deficit of 0.4%-0.5% of GDP in March.
Gross Domestic Production is expected to continue growing at a rate of about 7% (forecast growth of 6.7%-6.8%). A
favorable market for hydrocarbon resources will ensure the fast rate of economic growth. Russian oil cost about $30 per
barrel at the start of March and there are no signs that it will tumble in the near future.
Inflation is expected to be about 0.8% in March. Lower inflation
will be due to a halt on utility price hikes, which regional
Domestic demand has started to climb considerably this year. This will have an impact on GDP growth. Intensive growth
can be expected in industry, which analysts forecast at about 6.6%. Better domestic demand will also have an impact on
the development of the manufacturing industry.
The producers prices index may remain relatively high, due to the
impact of increased domestic demand, which will trigger a rise in
Fixed capital investment growth will be a little lower than can be expected for February. This is due to the early
government reshuffle. Investment decisions on capital transactions are always slowed during the period when a new
Cabinet is being formed, because new staff might lead to strategic plan adjustments. Fixed capital investment is
forecast to rise 7.3%-7.8% in March.
Real disposable incomes are expected to increase by 13%-14% year- on-year thanks to positive corporate results, lower
inflation in March, and the stability of mandatory payments.
Judging by prices for energy resources and other export goods,
exports will continue to grow and could reach a maximum of $12.7
authorities will avoid in the pre-election period.
prices for industrial goods. The index is forecast at 101.5% in March.
The monetary-financing sector is likely to be standard for this month. Money supply should start growing again after
a breather at the beginning of the year. This year was the first post-crisis year where money supply rose in January,
indicating that the influx of export earnings remains high. Money supply is predicted to go up 5%-6% in March to about
3.6 trillion rubles.
billion. Increased domestic demand and higher incomes will also lead to more imports and these may total $7.2 billion
to $7.3 billion. The foreign trade surplus will remain moderately high at $5.4 billion to $5.5 billion.
With the current progressive scale on export duties, high exports will mean high budget revenue. However, certain
large revenue items, particularly VAT account revenues, are planned only for the second half of the year. Federal budget
revenue in March is forecast at 18.8%-19% of GDP. [RU ASIA EUROPE EEU EMRG ECI INSI MCE EUB GVD DBT VOTE POL ENR CRU OIL
FIN TRD] me <>
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