The budget will have to do without the profits of the Central Bank for the first time in 20 years

The Finance Ministry expects losses from Bank of Russia at the end of 2017 and 2018, it follows from the explanatory note to the draft Federal budget for 2017-2019 (have RBC). In this case, as follows from the document, the profit of the Central Bank is already falling: the Ministry of Finance expect that in 2016 it will amount to less than a third of the result 2015.

“Income from transfer of a part of profit of the Central Bank of the Russian Federation in the Federal budget for 2017 is expected to reach 31.5 billion RUB billion RUB 69,642 less than the amount of income listed in 2016”, — stated in the explanatory Memorandum of the Ministry of Finance to the draft budget.

The Bank of Russia makes a profit mainly by providing liquidity to commercial banks and the foreign exchange market. According to the law “On the Central Bank of the Russian Federation (Bank of Russia)” income generation the main objective of the Central Bank is not. The banking regulator is considered a legal entity and the Bank on the nature of the activities, but with functions of a public authority. Its main responsibilities — control of inflation and supervision of the banking system. According to the law, 90% of the profits of the Central Bank is transferred to the budget, and the remaining 10% going to reserves and various funds.

By the end of 2015, Central Bank first listed in the Federal budget 90% of its profits. Old law limited the amount of 75%. In 2015, the regulator earned 112.6 billion rubles., directing the Federal budget 101,1 billion rubles, the Press service of the Central Bank and Finance Ministry did not comment on RBC fall in profits for operations of the Central Bank.

Starting in 2016 the income of the Central Bank affects the emerging structural surplus liquidity in the banking sector, said in the explanatory note to the draft budget for 2017-2019. In other words, Russian banks have sufficient liquidity and they have less to borrow from the Central Bank. This writes the Ministry of Finance in its explanatory note: the surplus reflects the decline in demand of credit institutions for refinancing instruments and, as a consequence, the decrease in interest income of the Bank of Russia.

Conversely, the placement of funds in banks, the Central Bank will increase its interest expense, reducing the profit of the regulator. TSB has returned to practice week Deposit auctions to collect the excess liquidity in the summer after an eighteen month break. Only in this way, the Bank of Russia absorbed a little more than 1.5 trillion rubles.

“The effects of these factors may affect the financial result of the Bank of Russia for 2017 and subsequent years, and lead to the formation of loss”, — noted in the explanatory Memorandum of the Ministry of Finance to the draft budget. In this regard, in 2018-2019 any proceeds from the Central Bank to the Federal budget the Ministry of Finance do not expect. Reporting of Bank of Russia, the last time he recorded a loss on its operations in 1998 when it exceeded 27.8 billion rubles In 1999, the Bank of Russia went into profit, earning 1,185 billion.

The transition of the banking system to the structural surplus liquidity is expected in early 2017, has repeatedly said the Central Bank. The influx of additional money into the banking sector occurs in part because the deficit of the Russian budget is financed from the Reserve Fund, whose assets denominated in foreign currency. From the statistics of the Ministry of Finance follows that the Reserve Fund began to decline from March 2016, “losing weight” during this period from 3.74 trillion to 2.03 trillion rubles (as of 1 October). For the Bank of Russia the transition to a surplus of liquidity means the conversion of the lender’s credit organizations are actually in their of the borrower.

Compared to the end of 2015, the profit of the Central Bank at 31.5 billion rubles for 2016 looks pretty conservative, says principal analyst at Nordea Bank Olga Lapshina. Agree with her and the chief economist of the Eurasian development Bank Yaroslav Lissovolik. In his opinion, to talk about the inevitability of radical change with the income of the Bank of Russia is still too early — the surplus liquidity may never come. “There are scenarios under which surplus liquidity in 2017 may be replaced by a deficit. This may be a deterioration in the external environment, the acceleration of capital outflows from Russia, a sharp decline in oil prices,” he said.