Russian authorities are concerned about the largest budget deficit: the hole exceeds the pandemic times – The Moscow Times

The Ministry of Finance of the Russian Federation is forced to revise budget parameters, the deficit will more than triple, revenues have collapsed amid cheaper oil.

The Russian authorities are forced to adjust the budget for 2025 in the face of deteriorating economic forecasts. The main reason was the fall in oil prices, which caused a sharp decline in income. He writes about it The Moscow Times.

The Russian government has officially revised the parameters of the federal budget for 2025, putting a record deficit in it over the past five years. The reason was the drop in the export price of Russian Urals crude oil to $60 per barrel, 20% lower than the initial forecast reflected in the updated macro scenario of the Ministry of Economic Development.

As a result, oil and gas revenues turned out to be below the base level, and instead of the expected replenishment of the National Welfare Fund (NWF), it will now have to cover the hole. 

According to the changes, budget revenues will decrease to 38.5 trillion rubles, expenditures will increase to 42.3 trillion rubles, and the deficit will triple to 3.8 trillion rubles, or 1.7% of GDP.

For comparison, a larger deficit was recorded only during the pandemic — 4.1 trillion rubles. Last year, it amounted to 3.5 trillion. Now, in all likelihood, the Ministry of Finance will have to resort more actively to borrowing, the volume of which is planned for the current year at the level of 4.8 trillion rubles.

Russian Finance Minister Anton Siluanov has already stated the need to revise the budget rule in order to adapt it to the new economic realities. Analysts confirm that the deficit parameters correspond to current macroeconomic trends: according to economist Egor Susin, the new deficit is “close to market expectations,” and economist Isakov noted that even with an increase in planned expenditures, their real value will decrease due to inflation.

The Finance Ministry has warned that an additional package of adjustments will be presented in the autumn. 

Earlier Dialog.UA He reported that the Russian economy is rapidly losing stability and the previous model based on oil exports and militarization is no longer able to cope with the growing challenges.

Meanwhile, the financial markets of the Russian Federation experienced a sharp drop after the failure of negotiations on Ukraine, which triggered the collapse of the ruble and a massive sale of Russian stocks.