Global Trends and Effects of Fiscal Policy in 2021

Abstract

The coronavirus pandemic in 2020 had a negative impact on the state of the Russian economy and the consolidated budget of the Russian Federation. At the same time, the budgetary system of the Russian Federation is sufficiently resilient to such external shocks. In 2020, borrowed funds from the domestic market were used to finance the budget deficit, partly from the Sovereign Fund, the amount of which, however, did not change by the beginning of 2021. Despite the spread of new strains of coronavirus infection and the relatively low level of vaccination in Russia, the recovery of the global economy and rising commodity prices contributed to a significant increase in consolidated budget revenues. At the same time, a policy of budget consolidation was pursued – those items of federal budget expenditures that unexpectedly increased in 2020 (primarily healthcare spending) were subject to reductions. The beginning of 2022 was marked by the emergence of new external shocks that significantly destabilize the economic and financial sphere of Russia. Now a certain level of budgetary stability has been achieved, which, among other things, will make it possible to solve new targets of the population and businesses support, but this is not enough in the medium term. Directions for operational measures of fiscal policy to restore the sustainability of public finances in the current environment are proposed.