OREANDA-NEWS. February 16, 2010. According to Deputy Finance Minister Tatiana Nesterenko, the fiscal deficit forecast for 2010 has been raised from 6.8% to 7.2% based upon new macroeconomic assumptions (lower inflation, stronger ruble, slower wage growth, but higher oil prices), as well as the planned East Siberia tax exemptions and new VAT reimbursement procedure, reported the press-centre of OTKRITIE Financial Corporation.     

The Ministry has requested that the bank capitalization program (RUB100 set aside) not move forward, and that spending of currently unallocated RUB22bn of anti-crisis funds be delayed.

View: In its current design, the bank capitalization program does not find support from banks. We believe the intention of the Ministry is to inhibit plans for a reallocation of this funding, and to discourage further calls to increase spending commitments that could occur if the oil prices outpace budget assumptions.  We believe that Russia’s fiscal deficit will be below the MinFin forecast, at 5.8%, due to higher oil prices. While we do not view Russia's fiscal deficit as excessive, given the state’s inefficiency in fiscal spending we believe the best way to support the economy would be through tax policies.