In discussions about Russia’s economy, it was noted that reallocations or rises in federal budget spending in selective months do not necessarily move the inflation needle in a meaningful way. This view was expressed by Alexey Zabotkin, the Deputy Governor of the Central Bank of Russia, according to reports by Interfax.
He explained that inflation is mainly driven by the structural deficits within the consolidated budget and by how funds from the National Welfare Fund are invested and deployed. These factors shape long-term price movements more than one-off spending bursts.
Zabotkin added that if the annual budget deficit remains constant throughout the year and the overall budget policy outlook does not shift in the medium term, aggregate demand will follow the path forecasted in earlier projections. He also referred to the central bank’s decision on the key interest rate, linking monetary policy to these broader fiscal dynamics.
Elvira Nabiullina, the head of the Central Bank, echoed a similar emphasis on the bank’s income sources from properties where policy decisions are already in place. She noted that the year-long pattern of budget expenditures plays a crucial role in calibrating the bank’s policy stance, underscoring the connection between fiscal activity and monetary settings.
Earlier information showed that at the start of 2024 there was a noticeable uptick in federal budget expenditures, driven by the Finance Ministry’s announcement of accelerated spending on several items. Data from Electronic Budget monitoring indicated expenditures reaching 4.63 trillion rubles as of February 14, underscoring a period of intensified fiscal activity.
There was also commentary from the Central Bank about challenges in foreign payments, highlighting ongoing pressures in international transactions that could influence the domestic financial landscape and currency dynamics.