Responding to Navalny Protests, Moscow Boosted Spending on Both Security and Social Programs, Alfa Bank Analyst Says

Paul Goble

            Staunton, March 12 – Despite increases in oil prices and taxes on the earnings of that branch, the Russian government deficit rose dramatically during the first two months of this year as Moscow responded to the Navalny protests not only by spending more on security functions but boosting social spend as well, Natalya Orlova of Alfa Bank says.

            During the first two months of 2021, the finance ministry reports that the Russian government collected 2.754 trillion rubles in taxes and spent 3.4 trillion, leaving the regime with a deficit of 645 billion rubles or 19 percent of the budget (finanz.ru/novosti/aktsii/protesty-v-podderzhku-navalnogo-porvali-rossiyskiy-byudzhet-1030175726).

            And this happened despite oil price rises which meant that government rent from them amounted to 1.224 trillion rubles in January and February, 15 percent below the figures of a year earlier, a trend that may very well continue into March because of OPEC talks, Finanz.ru suggests. That meant that the state’s combined in come was two percent below a year earlier.

            This “gigantic deficit, comparable to the figures for the peak of the crisis in 2020 arose because of a sharp increase in spending in February,” the financial portal continues. Most of this came in the form of enhanced social spending designed to lower social tensions and in money for the security agencies intended to suppress these if they continue, Orlova says.

            The Alfa Bank analyst says that programs intended to support the population in total rose by 85 percent year on year, while those supporting housing went up by a factor of two. The only reductions were in spending on health care now that the pandemic is easing.

            At the same time, the government almost doubled its spending on security agencies involved in the control and suppression of protests.

            “this sharp growth came as a surprise,” Orlova says, “if one considers that the annual plan had called for a reduction in spending of ten percent.” Most likely, she suggests, this spending was a response to the Navalny protests and the regime will reduce spending even more dramatically later in the year to make up for the January and February boosts.