Russia's surging deficit: Military costs, oil prices to blame
The Russian Ministry of Finance has reported a budget deficit of 2.7 trillion rubles (31 billion dollars) for the first two months of 2025, more than double the amount planned for the entire year. The primary reasons for this are accelerated military spending and falling oil prices.
The Ministry announced that the budget deficit for January and February 2025 stood at 2.7 trillion rubles ($31 billion), accounting for 1.3% of GDP. This is significantly more than the planned 1.2 trillion rubles ($13.9 billion) for the entire year.
According to "Kommersant," the decline in state finances is attributed to increased government contract funding and declining oil prices.
Expenditures increased by one-third
Budget expenditures for the first two months reached 8 trillion rubles ($92.5 billion), marking a 31% increase compared to the same period in 2024.
Revenues amounted to 5.3 trillion rubles, reflecting a 6% increase. However, despite increased VAT revenues, oil sector revenues declined, further straining the budget.
The Ministry of Finance acknowledges the risk of further declines in oil revenues due to continued low prices.
Price advantage dwindled
The average price of Urals oil in February was $61.70 per barrel, below the projected level of $69.70. Additionally, a strengthening ruble does not favor increased export revenues.
It is worth recalling that according to the Russian Ministry of Finance, the budget deficit in 2024 reached 3.49 trillion rubles, equivalent to $34.4 billion. Meanwhile, state income increased by 26% to 36.71 trillion rubles ($425 billion), and expenditures rose by 24.2% to 40.19 trillion rubles ($465 billion).
