Russia’s Budget Deficit Surges 14-Fold Since the Beginning of the Year
The Russian Ministry of Finance announced a significant rise in the country’s budget deficit for January, soaring 14-fold due to a 73.6% increase in spending at the start of the year. The deficit reached 1.7 trillion rubles ($17.73 billion), equivalent to 0.8% of the national GDP.
The ministry attributed this deficit to accelerated spending in the first quarter but assured that it would not affect quarterly fiscal targets or the structural balance goals for 2025.
Meanwhile, Prime Minister Mikhail Mishustin told President Vladimir Putin that it is crucial to return to a highly responsible fiscal and macroeconomic policy to curb rising inflation, which has become a major challenge for Russian authorities.
In 2024, the government twice raised its planned deficit target to meet financing needs. However, January’s deficit exceeded the previously set annual target of 0.5% of GDP.
According to Ministry of Finance data, budget revenues reached 2.67 trillion rubles, marking an 11% increase from the same period last year. Additionally, oil and gas revenues in Russia rose by 17%.
For the third consecutive year, Russia recorded a budget deficit of 3 trillion rubles (2% of GDP) in 2024.
The sharp rise in spending is largely attributed to funding what the Russian government calls the “special military operation” in Ukraine, as well as investments in the defense and military-industrial complex, contributing to higher inflation.
Government expenditures are expected to rise to 41.47 trillion rubles this year, with 41% allocated to defense and security. However, an increase in tax revenues is anticipated to reduce the budget deficit to 0.5% of GDP.
