The oil sector has provided a crucial support to the consolidated budget of the country (which include National Fund) in 2017 – oil revenues increased by 60% while their share in revenues has increased to 30%. Against this background, growth in non-oil taxes by 11%, confirms the growing dependence of the consolidated budget on oil revenues.
The non-oil deficit of the Republican budget by our assessment amounted to 12.9% of GDP in 2017 and gone far beyond the limit outlined in the new concept of the National Fund, where the level of non-oil deficit of the Republican budget is indicated at not higher than 9.3% of GDP. Thus, under the pretext of emergency one-time support for the financial sector it was allowed to breach obligations on savings of National Fund.
A gradual reduction in the guaranteed transfer to the Republican budget is of concern, that could potentially lead to a reduction in economic activity in the face of still fragile state of the economy. This, in turn, could force the government to back away from plans of budgetary consolidation and thereby impede the process of public finances balancing.
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