Russia faces soaring deficit as oil price slumps and spending rises
The Russian Ministry of Finance has reported a budget deficit of 2.7 trillion roubles (28.6 billion euros) for the first two months of 2025. This figure is more than double the amount planned for the entire year. The primary reasons for this are increased military spending and a decline in oil prices.
The Ministry stated that the budget deficit in January and February 2025 totalled 2.7 trillion roubles (28.6 billion euros), which represents 1.3% of the GDP. This is significantly more than the planned 1.2 trillion roubles (12.7 billion euros) for the entire year.
As "Kommersant" explains, the worsening state of public finances is due to accelerated funding of government contracts and a decline in oil prices.
Expenditure increased by one third
Budget expenditure in the first two months of the year reached 8 trillion roubles (85 billion euros), marking an increase of 31% compared to the same period in 2024.
Revenues amounted to 5.3 trillion roubles (56 billion euros), representing a 6% rise. Despite the increase in VAT revenues, the income from the oil sector fell, which further strains the budget.
The Ministry of Finance acknowledges the risk of further declines in oil income due to low prices.
Price advantage has diminished
The average price of Urals oil in February was 61.7 dollars per barrel, below the assumed level of 69.7 dollars. A strong rouble also does not support increased export revenues.
To recap, according to data from the Russian Ministry of Finance, Russia's budget deficit in 2024 reached 3.49 trillion roubles, equivalent to 37 billion euros. State revenues increased by 26% to 36.71 trillion roubles (389 billion euros), while expenditures rose by 24.2% to 40.19 trillion roubles (425,8 billion euros).
