The first two months of the year saw a rise in Russia’s budget deficit due to a decline in oil and gas revenues and sanctions imposed as a result of President Vladimir Putin’s actions in Ukraine.
The Finance Ministry reported a deficit of 2.58 trillion rubles (£29bn) in January and February, with spending reaching 5.74 trillion rubles (£64bn), a 51.5% increase from the same period last year.
While monthly figures were not provided, February’s spending appeared to be lower than January’s 3.12 trillion rubles (£35bn). Russia’s economy had remained resilient despite Western sanctions in the past, but with more funds being allocated to the military, the country’s crucial energy export earnings have also been affected by price caps.
Oil and gas revenues were down 46.4% at 947 billion rubles (£10.5bn) in the first two months of 2023 compared to last year. Overall budget revenues decreased by 24.8% in the same period.
Moscow depends heavily on income from oil and gas, which amounted to around 11.6 trillion rubles (£130bn) last year, to support its budget spending. With the cost of the Ukraine conflict weighing heavily on its finances, Russia has been compelled to dip into its international reserves to cover the deficit.
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