The budget of 2018: how Tatarstan to live at a price of $40,8 per barrel

In 2018, the revenues and expenditures of the Republic of Tatarstan will be higher, but the expectations — more modest

President of Tatarstan Rustam Minnikhanov has adopted the budget in the State Council for 2018-2020. It provides more spending on education, healthcare and welfare and less on housing and public utilities and culture. As for the main forecasts, they had to be changed. Officials moderated last year's expectations in part of industry and economic growth. Real wages, by their current plan, will also increase slower than they do now. Read more in the article of Realnoe Vremya.

Less housing utilities, more education

The future budget is expected to be more scarce than the current one. According to the forecast, in comparison with 2017 the deficit will increase by 0,73 billion rubles and will amount to 2,6 billion rubles. However, the practice of recent years shows that during a year the main parameters change.

The main income item in 2018 will remain the income tax, its revenues are forecasted at the amount of 120,5 billion rubles. It is more than 65% of all tax and non-tax revenues. From the tax on incomes of physical persons it is planned to collect 49,9 billion rubles. In total, Tatarstan's revenues will amount to 236,5 billion rubles, the expenses — 239,1 billion rubles.

The social items prevail in the expenditures, the main of them is education. Spending on it next year will grow by 4,9 billion rubles, up to 55,2 billion rubles. Items for other social spending in the budget 2018 are also provided more: on health care — by 4,7 billion rubles (a total of 22,5 billion rubles), social policy – by 2,4 billion rubles (42 billion rubles).

The expenditures under the section ''physical culture and sport'' will increase by more than 2 billion rubles, by slightly — on defense, security, as well as ''national issues'' (expenses for the president, government bodies).

On the contrary, some expenses will be cut. For example, on housing and communal utilities it has been allocated by 2,2 billion less — a total of 10,9 billion rubles. It is also planned to spend less on culture and cinematography (by 0,64 billion rubles).

Oil — more expensive, economy — slower

The calculation of the future budget is provided with the price of Urals oil at the level of $40,8 per barrel; it is by $0,8 more than predicted a year ago. In January-September 2017, an Urals barrel cost on average $50,5. The general expectations for economic growth have changed for the worse. According to the new forecast, Tatarstan GRP growth in 2018 will be by 0,4% lower than expected before (it will amount to 3,8%, by the end of this year it is expected an increase by 2,9%). The volume of GRP in 2018, as forecasted by the officials, will reach 2,22 trillion rubles.

Industry expectations also had to be moderated. Now officials expect a growth of production in 2018 at the level of 5,7%, it is by 0,8% less than projected in the forecast a year ago. However, in the next 2 years a growth will slow even greater: in 2019 — to 3,2%, in 2020 — to 2,9%. The notes attached to the draft budget state about to a postponement of several investment projects of large enterprises at a later date.

Some expenses will be cut. For example, on housing and communal utilities it has been allocated by 2,2 billion less — a total of 10,9 billion rubles. Photo: Oleg Tikhonov

According to the calculations of the authorities, inflation in the next 3 years will be equal to exactly 4%, average wages will grow by 4,5—4,6%, but in real terms the wage growth will slow down. If by the end of 2017, they were expected to grow by 1,2%, then the growth will be only at 0,5-0,6% per year.

Natalia Milchakova from Alpari believes with the officials are too cautious with the oil price: in reality it will be higher than that provided in the forecast. There is no doubt that Urals will be more expensive than $40,8 — most likely, the price will be at around $51 per barrel or above, agrees deputy director of the corporate ratings group AKRA Vasily Tanurkov. But we should consider not only this but also the dollar rate (for 2018 the rate is provided to be $1/69,8 RUB).

''Certainly, a higher oil price means higher revenues of Tatneft JSC and small oil companies of Tatarstan, which will have a positive impact on the budget,'' says Milchakova. But the republic does not depend on oil alone, she highlights that the situation in mechanical engineering and petrochemical industry will have the role. Tanurkov also said that the oil is not the main thing on what the revenue will depend.

By Artyom Malyutin