Anticipated Shortfall in National Budget: Finance Department Predicts Deficit Reaching 3.2 Trillion Rubles
Update on Russia's Budget Deficit for 2025
Hey there! Let's dive into the latest financial news coming out of Russia.
From a Manageable Deficit to a Sizable One
In a surprising turn of events, Russia's initially projected budget deficit for 2025 has ballooned from an estimated 1.17 trillion rubles (around $14.3 billion) to a whopping 3.79 trillion rubles ($46.2 billion) – a more than threefold increase. This astronomical rise is a stark contrast to the meager 0.6% of GDP deficit observed in the same period last year.
Culprits Behind the Budget Explosion
So, what stirred this fiscal chaos? The primary culprits are a nosedive in oil prices and a significant increase in public spending. The Russian Ministry of Finance has lowered the assumed average oil price in its budget calculations from $69.70 per barrel to $56, slashing anticipated oil and gas revenues from $114 billion to $101.4 billion. Simultaneously, public spending has surged, with the government increasing its 2025 public spending forecast by about $10.2 billion. This increase is mainly due to elevated military spending resulting from the ongoing conflict in Ukraine.
Other factors contributing to the widening deficit include advanced funding of expenses in the beginning of the year and a decline in energy revenues.
The Comparison Game
Initially, the budget deficit was projected to be a modest 0.5% of GDP. The revised figure now stands at a whopping 1.7% of GDP, bringing it neck and neck with the high deficit levels seen in 2024. In terms of nominal value, the 2025 deficit is the second-largest since the pandemic year of 2020.
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- The projected budget deficit for Russia in 2025 has increased from an original estimate of 1.17 trillion rubles to a staggering 3.79 trillion rubles, approximately equivalent to $46.2 billion.
- The Russian Ministry of Finance has identified a decline in oil prices, a surge in public spending, advanced funding of expenses, and a drop in energy revenues as key contributors to the widening budget deficit.
- For the latest updates and analysis on Russia's budget deficit, consider following our Telegram channel at @expert_mag.
- In 2025, the budget deficit is projected to be 1.7% of GDP, which is similar to the high deficit levels observed in 2024, positioning it as the second-largest deficit since the pandemic year of 2020.
