RUSSIA'S BUDGET DEFICIT DOUBLES AMID MILITARY, OIL WOES

The Russian Ministry of Finance has reported a budget deficit of 2.7 trillion roubles (CAD 45 billion) in the first two months of 2025, more than double what was planned for the entire year. The main reasons cited are accelerated military spending and a downturn in oil prices.

The Ministry announced that the budget deficit in January and February 2025 totalled 2.7 trillion roubles (CAD 45 billion), representing 1.3% of GDP. This is significantly more than the planned 1.2 trillion roubles (CAD 2 billion) for the whole year.

As explained by "Kommersant," the deteriorating financial situation is due to accelerated funding of government contracts and falling oil prices.

Expenditure increased by one-third

Budget expenditure in the first two months of the year amounted to 8 trillion roubles, an increase of 31% compared to the same period in 2024.

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Revenues amounted to 5.3 trillion roubles (CAD 88 billion), a rise of 6%. Despite the increase in VAT revenues, income from the oil sector fell, putting further pressure on the budget.

The Ministry of Finance acknowledges the risk of further decreases in oil income due to low prices.

Price advantage has diminished

The average price of Urals oil in February was USD 61.70 per barrel, below the expected level of USD 69.70. A strengthening rouble does not favour increased export revenues.

For context, according to data from the Russian Ministry of Finance, Russia's budget deficit in 2024 reached 3.49 trillion roubles, equivalent to CAD 58 billion. State revenues increased by 26% to 36.71 trillion roubles (CAD 613 billion), while expenditures rose by 24.2% to 40.19 trillion roubles (CAD 670 billion).

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2025-03-12T13:56:56Z