{"id":174847,"date":"2025-06-11T05:35:21","date_gmt":"2025-06-11T05:35:21","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/174847\/"},"modified":"2025-06-11T05:35:21","modified_gmt":"2025-06-11T05:35:21","slug":"russias-budget-deficit-up-fivefold-over-2024-finance-ministry","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/174847\/","title":{"rendered":"Russia’s Budget Deficit Up Fivefold Over 2024 \u2013 Finance Ministry"},"content":{"rendered":"

Russia’s budget deficit rose by 168 billion rubles ($2.18 billion) in May, bringing the total for the first five months of 2025 to 3.4 trillion rubles ($44.2 billion), or 1.5% of GDP, according to<\/a> the Finance Ministry.<\/p>\n

That is nearly five times higher than the same period of 2024 and nearly equal to the entire deficit planned for the full year \u2014 3.8 trillion rubles ($49.4 billion), or 1.7% of GDP.<\/p>\n

Initially, the Finance Ministry had aimed to keep the deficit three times smaller: 1.2 trillion rubles ($15.6 billion), or 0.5% of GDP.<\/p>\n

May\u2019s budget results were somewhat worse than expected, economist Yegor Susin said<\/a>. Revenue growth has slowed, and while spending has eased somewhat after the early-year advance payments, it hasn\u2019t dropped as much as hoped.<\/p>\n

Susin estimates that the current deficit trajectory is running at about 1% of GDP higher than planned, which translates to nearly 6 trillion rubles ($78 billion).<\/p>\n

Analysts at MMI warn<\/a> that the budget situation is becoming increasingly critical and expect the deficit to reach 6 to 7 trillion rubles ($78-91 billion).<\/p>\n

Before the full-scale invasion of Ukraine, government spending was fairly evenly spread throughout the year, with a spike in December to close out contracts.<\/p>\n

But since 2023, the Finance Ministry has front-loaded military expenditures early in the year, with spending returning to normal mid-year before another jump in November-December. Analysts had expected the budget to move into surplus starting in May, but that didn\u2019t happen.<\/p>\n

The main factors are low oil prices and a strong ruble. The ruble appreciated for a sixth consecutive month in May, while oil and gas revenues fell to just 513 billion rubles ($6.67 billion), their lowest point in two and a half years.<\/p>\n

Over the first five months of 2025, these revenues totaled 4.24 trillion rubles ($55.1 billion), down 14.4% from a year earlier (after four months, the shortfall was 10.3%). The 2.6 trillion ruble ($33.8 billion) decline in oil and gas revenues is the main reason for the budget revision.<\/p>\n

While these revenues still exceed the baseline level, the Finance Ministry warns of risks due to weakening price conditions.<\/p>\n

Non-oil and gas revenues are providing some relief. Their inflow slightly exceeds the revised target, which was increased by 0.8 trillion rubles ($10.4 billion).<\/p>\n

In May alone, they brought in nearly 2 trillion rubles ($26 billion), and over five months, totaled 10.5 trillion ($136.5 billion) \u2014 12.3% more than in January-May 2024. This growth is largely due to higher corporate profit taxes introduced this year. Turnover taxes, including VAT, also rose by 5.8% compared to last year.<\/p>\n

Budget spending in May totaled 2.6 trillion rubles ($33.8 billion), and 18.1 trillion ($235.3 billion) over five months, 3.1 trillion ($40.3 billion) more than the same period last year.<\/p>\n

Some of this spending was financed by extra non-oil and gas revenues received at the end of 2024, the Finance Ministry says, expressing confidence that the budget will meet the updated plan.<\/p>\n

Analysts at Tverdyye Tsifry note<\/a> that spending has continued on a \u201chigh\u201d trajectory, with the annual growth rate for January-May holding steady at 21%.<\/p>\n

The Finance Ministry plans total spending of 42.3 trillion rubles ($549.9 billion) for the year, which would require cutting spending by 3.9% in the second half compared to June-December 2024, according to MMI analysts.<\/p>\n

\u201cThat would mean a real cut of over 12%, which seems unlikely,\u201d they say. They expect total spending of at least 44-45 trillion rubles ($572-585 billion), while revenues will fall short by at least 0.5 trillion rubles ($6.5 billion). This points to a deficit of 6 to 7 trillion rubles ($78-91 billion) \u2014 and that\u2019s an optimistic scenario, they conclude.<\/p>\n

To meet the revised annual target, the Finance Ministry would need to maintain a monthly surplus of 270 billion rubles ($3.51 billion) from May through November, according to<\/a> Gazprombank analysts. This is higher than the recent average of 210 billion rubles ($2.73 billion) per month for this period.<\/p>\n

Gaidar Institute experts\u00a0predicted<\/a> the budget deficit would improve after peaking in May-June. But they noted that economic slowdown, worsening trade conditions, high interest rates and geopolitical challenges are all putting pressure on the budget and worsening existing imbalances.<\/p>\n

Still, they believe borrowing and the use of liquid assets from the National Welfare Fund could cover the shortfall.<\/p>\n

The liquid portion of the fund had fallen to 2.8 trillion rubles ($36.4 billion) by the end of May, with 447 billion ($5.81 billion) allocated to cover the oil and gas revenue shortfall.<\/p>\n","protected":false},"excerpt":{"rendered":"Russia’s budget deficit rose by 168 billion rubles ($2.18 billion) in May, bringing the total for the first…\n","protected":false},"author":2,"featured_media":174848,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7655],"tags":[1700,49700,332],"class_list":{"0":"post-174847","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-russia","8":"tag-economy","9":"tag-finance-ministry","10":"tag-russia"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114663111032074403","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/174847","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=174847"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/174847\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/174848"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=174847"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=174847"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=174847"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}