Russia’s Fiscal Deficit in January

MOSCOW (Reuters) – Russia’s fiscal deficit surged 14-fold in January due to a 73.6% increase in spending, reaching 1.7 trillion roubles ($17.73 billion), or 0.8% of national output, according to the finance ministry’s preliminary data.

The ministry stated that this surge arises from accelerated expenditure financing within the first quarter and assured that it wouldn’t disrupt the quarterly trajectory or the achievement of 2025’s structural balance targets.

In January 2024, the deficit was reported as 124 billion roubles. Throughout 2024, Russia faced a budget deficit exceeding 3 trillion roubles, roughly 2% of GDP, marking the third consecutive year of deficit. Increased spending is attributed to financing the “special military operation” in Ukraine and the military-industrial complex, contributing to rising inflation.

Prime Minister Mikhail Mishustin conveyed to President Vladimir Putin the necessity for a return to a “very responsible fiscal and macroeconomic policy” to manage the soaring inflation challenge.

The government had to revise the planned deficit figure twice throughout 2024 to satisfy financing needs, with January’s deficit surpassing the plan of 0.5% of GDP for the entire year.

Budget revenues stood at 2.67 trillion roubles, reflecting an 11% increase compared to the same period last year, with oil and gas revenues rising by 17%, as stated earlier by the ministry.

Moscow forecasts spending to escalate to 41.47 trillion roubles this year, with 41% allocated to defence and security. Anticipated increases in tax revenues may reduce the fiscal deficit to 0.5% of GDP.

($1 = 95.9000 roubles)