Budget deficit financed from cash balances affects growth of aggregate demand, this is significant factor - Central Bank of Russia deputy governor

ST. PETERSBURG. June 5 (Interfax) - Covering the increase in the federal budget deficit from its cash balances affects the money supply and aggregate demand, which is a significant factor for monetary policy, Central Bank of Russia Deputy Governor Alexei Zabotkin said.

"A deficit that is financed from budget balances is also an additional contribution to the growth of the money supply and aggregate demand, so in that sense it is a significant factor. Again, it is difficult to quantify it yet because there are no public figures for the revised budget for this year yet," Zabotkin told journalists after a Sberbank business breakfast on the sidelines of the 2026 St. Petersburg International Economic Forum (SPIEF 2026).

"If they are not available by the July rate meeting, we will treat this, as always, as a factor of uncertainty regarding the budget's contribution to aggregate demand," he said.

A later transition to a zero primary budget deficit could also affect aggregate demand and lead to an adjustment in the key rate trajectory, he said.

"The issue is not what we want, but what we will base our monetary policy decisions on. Information that the budget will now achieve a structural zero primary deficit by 2029, and not in a faster timeframe, is significant information for refining the forecast towards a larger contribution of the budget to aggregate demand, and accordingly, a refinement of the key rate trajectory," Zabotkin said.

At the same time, he emphasized that refining the key rate trajectory will be based on all factors and all the data as a whole. "Therefore, what the refinement of the entire forecast will be following the July round is impossible to predict now," he said.