In this spotlight, we take a look at the performance of the Russian economy and try to identify the main challenges that the Russian government will face in the near future. However, GDP is lower in dollar terms than it was in 1998. Reasons for the discrepancy were not given, but it might be explained by a change of methodology by the agency. According to preliminary figures released by the Ministry of Finance, the federal deficit equaled R67.7 bln for 1999. The execution of the budget was far better than most people had expected.
Russian officials claim they overachieved their tax collection targets for the period.
Nearly a fourth of budget expenditures went to servicing domestic and foreign debt. The budget for 2000 was signed into law by Boris Yeltsin on December 31 - the first time since 1995 that a federal budget was approved before the start of the fiscal year. The money supply rose notably in the second quarter and at the end of the year, due to fact that the CBR actively bought foreign currency on the market in order to service foreign debt. In general the Central Bank did a pretty good job financing the federal budget deficit and foreign debt payments, while keeping the ruble fairly stable. This excess liquidity in the bank system could cause pressure on the ruble and thereby fuel inflationary expectations in the future.