Russian Budget 2021: Social Focus Remains

Elevated budget spending in January and rumored plans of a social spending package this year worth an additional 0.5% of GDP, support our take that this year's budget fulfillment may be softer than initially guided by the government. However, that does not contradict the general course for consolidation, in our view.

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According to preliminary estimates, January's federal budget was fulfilled with a RUB185bn deficit vs. our expectations of a small surplus of RUB50-100bn. At the same time, Reuters has recently reported on the rumored intention to boost this year's social spending plan by 0.5% GDP, or RUB500-600bn. We have the following observations and takeaways:

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