Russia Rules Out Borrowing Cut Even as Revenues Surge

(Bloomberg) -- Russian Finance Minister Anton Siluanov said 1.7 trillion rubles ($23 billion) in extra budget revenues this year will go to spending on welfare benefits and other steps to boost the economy, ruling out the possibility of another cut to the government’s borrowing target.

“We’re using these revenues to help people,” Siluanov told state television on the sidelines of the Moscow Financial Forum Wednesday.

His comments came just hours after one of his deputies, Timur Maksimov, said the ministry may be able to come in below the borrowing plan this year thanks to all the extra income, a move he said would be especially attractive now that interest rates have climbed. 

Russian bonds have drawn inflows from foreign investors in recent months as fears of western sanctions have subsided and the government’s financial position has strengthened amid a faster-than-expected economic recovery. Earlier in the year, the Finance Ministry cut the borrowing program by 900 billion rubles, citing funds left over from debt issues in 2020. 

But Siluanov said Wednesday that the gross borrowing target for this year will remain at the current level of about 2.8 trillion rubles. The budget will be balanced this year, he said, with a surplus expected in 2022 and 2023.

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