Moscow’s budget deficit reaches new high after just four months into the new year
Moscow’s been spending Russia’s money at a furious pace and has exceeded the country’s total budget deficit targets for 2023 just four months into the year according to recent data from the Russian Ministry of Finance.
The Finance Ministry’s preliminary assessment![]()
On May 10th, Russia’s Finance Ministry released a preliminary assessment of how the country’s federal budget had been executed in the first four months of the year and it showed that Vladimir Putin and his government might be facing significant problems
A major hit to federal revenues 
Federal revenues between the beginning of January to the end of April took a major hit and fell by 22% over the same period in 2022 to just 7.8 trillion rubles, which would be equivalent to roughly $45 billion USD based on analysis from The Moscow Times.
Falling oil and gas prices![]()
One of the big reasons for the Kremlin’s dropping revenue was due to a decrease in Russia’s oil and gas revenue. This key economic sector saw a 52% drop in its earnings year-over-year and made Russia just 2.3 trillion rubles or $30 billion USD.
A significant budget shortfall
Moscow did see non-oil and gas revenues increased by 5% to 5.5 trillion rubles or $72 billion USD. But that increase was not enough to save Russia from a significant budget shortfall that brought the country’s federal deficit to the largest it’s been in years.
Increasing expenditures![]()
The Finance Ministry’s report noted that the Russian government’s expenditures in the first four months of the year reached an astonishing 11.2 trillion rubles, meaning the Kremlin spent roughly $145 billion USD in the first four months of 2023.
Starving off disaster
“Rising military production and huge state spending are keeping Russia’s industry buzzing along,” noted a May 11th Reuters report, but Moscow’s spending has come at a significant cost and it could put the country in a more vulnerable position later this year.
Surpassing deficit targets for all of 2023![]()
Russia’s increased spending, coupled with the country’s declining revenues, resulted in a budget deficit rise of 3.42 trillion rubles or $45 billion USD between January and April according to The Moscow Times—which surpassed total government targets for 2023.
A ballooning budget
How Russia’s ballooning budget deficit will affect the country has yet to be determined but some economists are predicting that it could lead to higher inflation in the country.
Russia is not succeeding…![]()
“Russia’s budget balance continued to deteriorate in April,” wrote Bloomberg’s Russia Economist Alexander Isakov. “Despite government efforts to rein in spending, fresh data does not provide evidence it is succeeding.”
“Surging public spending”
“Surging public spending is likely to push inflation higher in the coming months and require the central bank to roll back some of the policy rate cuts it delivered last year,” Isakov added.
Oil revenue was keeping Moscow afloat![]()
Russia’s economy was widely expected to collapse in the face of Western sanctions imposed after the country invaded Ukraine but Moscow has kept things afloat on the back of its domestic spending and oil and gas revenues according to Newsweek.
The $60 dollar oil price cap
In December 2022, the United States and the European Union put a $60 dollar price cap on Russian oil in an attempt to disrupt Moscow’s ability to fund its war, a strategy that has largely worked according to one economist who spoke with Axios in April.
Limiting Russia’s economy![]()
“Most people would say it’s probably helped reduce revenues,” Robert McNally, president of the Rapidan Energy Group and former energy advisor to President George W. Bush, said according to Axios.
Russian Finance Minister Anton Siluanov 
Reuters noted that Russian Finance Minister Anton Siluanov has frequently said the country’s budget deficit would not exceed more than 2% of Russia’s Gross Domestic Product, but the news organization also pointed out that most analysts disagreed with this assessment.
What will happen next?![]()
