MOSCOW (Reuters) - The Bank of Russia raised a record 5.25 trillion roubles ($74.15 billion) at a one-week deposit auction on Tuesday, just three days before its next rate decision, as the country's yawning budget deficit floods the banking sector with excess liquidity.
Slumping energy revenues and soaring expenditure pushed Russia's federal budget to a January deficit of 1.76 trillion roubles, as sanctions and the cost of Moscow's military campaign in Ukraine choke the economy's prospects.
Analysts say that spending almost 60% above plan in January is contributing to a huge liquidity surplus in the banking system, which could in turn give the central bank less room to resume monetary easing.
"The figures are unusual," said CentroCreditBank economist Evgeny Suvorov. "Never in history have we seen such large-scale spending at the start of the year."
Almost 250 banks participated in Tuesday's auction, the highest number of participants since August 2020. The central bank set the auction limit at 5.95 trillion roubles.
"Since December, we have observed a peak liquidity surplus in the system," said Denis Popov, chief macroeconomic analyst at Promsvyazbank. "It is seasonal, but this year it is particularly pronounced and prolonged. The budget deficit in January is prolonging this surplus."
Russia's structural liquidity surplus has increased to 3.38 trillion roubles as of Feb. 7, from 0.57 trillion roubles at the start of the year.
"It is budget expenditures that look the hardest to predict right now," said Olga Belenkaya of Finam brokerage. "In our view, the likelihood that they turn out higher than the 29 trillion roubles that is budgeted for is quite high."
Extrapolating from current dynamics until the end of the year and assuming that non-oil and gas revenue targets are achievable, Belenkaya estimated that the budget deficit could reach 6.5 trillion roubles, well above the planned 2.9 trillion roubles.
"The latest statistics heighten risks of exceeding the annual spending plan, which could require tighter monetary policy from the Bank of Russia," said Bank St Petersburg analysts.
Analysts polled by Reuters expect Russia's central bank to hold its key interest rate at 7.5% on Friday, but to give a more hawkish signal to the market as inflationary risks become more pronounced.
($1 = 70.8000 roubles)
(Reporting by Elena Fabrichnaya; additional reporting by Darya Korunskaya; Writing by Alexander Marrow; Editing by Gareth Jones)