Russia's budget deficit expands to 0.7 percent of GDP in July
(MENAFN) Russia's budget deficit expanded to 0.7 percent of GDP in July, up from 0.5 percent in June, according to the Finance Ministry's latest report. This widening deficit is attributed to rising government spending and a decrease in revenues. For the period from January to July, the budget deficit was approximately half of what it was during the same timeframe last year, a period heavily impacted by Western sanctions related to Russia's ongoing conflict in Ukraine, including caps on oil prices and a ban on crude imports.
Government spending surged by 23.3 percent in the first seven months of the year compared to 2023, largely due to substantial financial allocations towards the defense sector to support the war effort in Ukraine. Conversely, revenues increased by 35.9 percent year-on-year, driven by a significant rise in energy revenues—over 60 percent—attributed to higher Russian oil prices. Preliminary data shows that the deficit for January through July reached 1.4 trillion rubles (USD16.31 billion), a decrease from 2.6 trillion rubles in the same period last year but up from 0.9 trillion rubles in the first half of 2024.
Moscow anticipates a notable rise in both budget revenues and expenditures for the remainder of the year, with plans to allocate 37.18 trillion rubles and generate 35.06 trillion rubles in revenue. This would result in an annual deficit of approximately 1.1 percent of GDP, or 2.12 trillion rubles. Despite the current shortfall, Russia's budget deficit has exceeded three trillion rubles annually for the past two years, with funding sourced from domestic borrowing and reserves accumulated from excess energy revenues.
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