Chasing real developments in Russia’s government budget

Abstract

This paper traces the development of real volumes of expenditures and revenues of Russia’s consolidated government budget (combined federal, regional and local budgets, as well as state social funds, but excluding inter-budget transfers). Novel budget deflators are built from relevant prices and structures of the government budget’s expenditures to assess: (1) how the government has performed the basic twin role of (A) supplying services and goods, including spending on individual functional branches of the government budget sector, and (B) providing social support; and (2) how government budget spending has impacted demand in the economy. Regarding the supply of services and goods, the real volume of government budget spending for acquiring the inputs remained well below its 2009 peak during most of the 2010s. This decline reflects, in particular, the major increases in nominal wages in the government budget sector. Real spending on the supplying government sector branches have moved along partly different paths. In the task of providing social support, the spending allotment increased in real terms until the middle of 2010s, then levelled off. Looking at the impact of government spending on demand in the economy, the real spending volume rose almost continuously before plateauing in 2013. The volume declined considerably in 2015, staying at the lower level until 2019.