Russia faces a budget scenario increasingly complicated after the sharp drop in income from oil and gas, its main source of state financing. According to reports The Moscow Timesincome derived from the trade of energy raw materials could be reduced by almost 40% in the first two months of the year compared to the same period of the previous year, which threatens to skyrocket the public deficit to figures of tens of billions of dollars.
According to estimates by economist Yegor Sustin, the Russian Treasury will receive between 11.6 billion and 12.9 billion dollars from oil and gas exports between January and February, compared to the 20.1 billion registered in the same period last year. The drop also occurs at a time of high public spending, which for those two months is estimated at around $103 billion.
If the rest of the Kremlin’s income is taken into account, the budget gap during this beginning of the year could be between 35,000 and 39,000 million dollars, according to Sustin’s calculations. This deterioration adds to an already especially negative fiscal year 2025 for Russian finances.
Last year closed with a record deficit of $73 billion, the largest in absolute terms since 2006, reflecting the combined impact of increased public spending and pressure on energy revenues.
The Russian Government itself recognizes the situation. Deputy Finance Minister Vladimir Kolychev has admitted that oil and gas revenues are lower than initially forecast, while noting that spending will be significantly higher in the first months of the year. As explained, this increase responds in part to advance payments of government contracts.
For the entire year, Moscow foresees a total expenditure of more than 567.6 billion dollars, of which almost a fifth will be executed in January and February. The Ministry of Finance has set the objective of limiting the deficit and keeping it below that recorded last year. In the current budget, The projected deficit amounts to $49 billion.
However, several analysts cited by the aforementioned media consider this unrealistic goal. Gazprombank experts estimate that the budget deficit could be between $64.5 billion and $71 billion. In terms of gross domestic product, this imbalance would reach a maximum of 2.5% of GDP, a proportion that, although relevant, is still lower than that recorded by other countries with high levels of debt.
