[Original in Russian. Automated translation with minimal edits]
Russia’s federal budget deficit increased again in July, the Finance Ministry reported on Tuesday.
Over 7 months, the government collected 22.112 trillion roubles in taxes for the treasury — 8.8% more than the previous year. At the same time, expenditures increased almost twice as fast as revenues — by 14.5%, to 28.567 trillion roubles.
As a result, at the beginning of August, a “hole” of 6.455 trillion roubles appeared in the budget — an amount equal to the annual budget of Moscow, four annual budgets of St. Petersburg and 11 annual budgets of large regions such as Tatarstan or the Krasnodar Territory. Compared to the same dates last year, the deficit has increased by 1.4 times and is already almost twice the plan for the whole year (3.786 trillion roubles).
The fundamental picture for the budget continues to deteriorate, states Finam strategist Yaroslav Kabakov: oil and gas revenues for the first seven months decreased by 16.8%, and the increase in revenues from higher VAT (by 24.9%) barely compensates for this shortfall. At the same time, the Ministry of Finance is spending more and more, and it seems that by the end of the year, expenses may exceed the plan by almost 5 trillion roubles, according to Kabakov’s assessment.
Balancing the budget is becoming increasingly difficult, notes Ilya Sokolov, a leading researcher at the Gaidar Institute: the surge in oil and gas revenues due to the war in Iran turned out to be short-lived and was largely spent on subsidies to oil companies, whose refineries are burning and shutting down one after another.
Non-resource revenues are increasing only due to higher taxes, not economic growth, Sokolov emphasises: in the first half of the year, GDP grew by only 0.3%, and in the second half of the year, the economy may slide into recession. This will lead to a shortfall of 600-800 billion roubles in VAT, as well as in corporate and personal income tax, warns Sokolov. By the end of the year, the budget deficit could approach 10 trillion roubles, Khabakov predicts.
Military spending remains the main unknown for the budget: it is clear that it will exceed the plan, but it is not yet known by how much, notes Ekaterina Vlasova, an economist for Russia and the CIS at Bloomberg Economics. According to Bloomberg, the Ministry of Defence is demanding an increase in the military budget by 40%, or 4-5 trillion roubles. The Ministry of Finance planned to satisfy the military’s appetite through debt, but in July it was forced to suspend government bond auctions due to the market collapse.
Most likely, after the State Duma elections, fiscal tightening should be back on the agenda, Vlasova warns: the authorities may cut spending on non-military items or raise taxes. Due to problems with raising debt, a new VAT increase is possible, according to economist Kirill Rodionov.
Since the beginning of the invasion of Ukraine, the budget has spent almost 50 trillion roubles on the war. To pay for the army and weapons production, the government spent three-quarters of the National Welfare Fund’s available funds, introduced export and exchange duties, increased the mineral extraction tax, and confiscated private assets worth 4 trillion roubles. In 2025, income tax and personal income tax for wealthy citizens were increased, and in 2026, VAT and taxes for small businesses rose.
“The easy money for the Kremlin is over,” says Agathe Demarais, a senior fellow at the European Council on Foreign Relations: having started with businesses and billionaires, the authorities have switched to the wallets of ordinary people. This does not mean that Vladimir Putin “will soon run out of money, but he is definitely running out of politically acceptable ways to find it,” Demaraïs emphasises.
…
That’s more than seven and a half dollars.
Come on
pokes russia with a stick
Collapse already
You can’t trust any statistic coming out of Russia. They are waging a war and of course they will not give Ukraine a statistic showing that they are near bankrupcy. So take everything they say with a grain of salt, we know that they are meddling with their numbers
What did Hemingway say about how he went bankrupt? Slowly and then quickly?
“How Did You Go Bankrupt?” “Two Ways. Gradually and Then Suddenly.”
And then things got worse
Why is the Russian national debt never mentioned? It’s currently only $482.4 billion, which is only approx 16% of its GDP. Now, it’s been keeping it low by selling off gold and diamond stockpiles and cannibalizing its own oligarchs’s fortunes, and those options are running out as the article notes. But I just think it’s worth noting that the debt isn’t anywhere near the red zone right now. Obviously, though, if the deficit remains high then the debt will grow rapidly, but at the current rate of loss of (according to @MrSulu@lemmy.ml ) about $78.85 billion per year, it would still take several years for the debt-to-GDP ratio to approach the high levels that other nations have, like 103% for the USA, 201% for Japan, 101% for the UK, 133% for Italy, etc.
I’m no economist, though, so I don’t know if the deficit is also set to grow rapidly, now that Putin’s run out of pockets to easily pick.
https://www.ceicdata.com/en/indicator/russia/national-government-debt
The problem for Russia is that that’s only good news if someone is willing to take on more debt. But bond sales were suspended in July because nobody was buying them, so there’s no real path to increasing that debt-to-GDP ratio.
Oh right, of course. Duh! I had a feeling I was missing something. Of course debt will remain low if the country is unable to sell bonds. But that’s not good news for Russia, obviously! Thanks for pointing that out! I should have realized.
Government bonds rates are usually linked to inflation. Over the past 5 years, inflation on the ruble has averaged 17% per year. That’s the problem. The buyers want the 10 year bonds to be at 17-18%. There’s all sorts of issues with this for the government.
I would suspect that a few oligarchs are going to mysteriously run afoul with Putin in the next few months. Confiscating their assets will fill the hole in the budget for a little while.
Russia’ low debt-to-GDP ratio is low mainly due to historically high revenue by fossil fuel exports particularly in the 2000s, when the ratio remained even in the single-digit numbers. But the Kremlin didn’t invest its wealth for the benefit of the country and its people. There has been a high infrastructure gap in Russia compared to other middle-income countries even before the war, and social welfare and healthcare are lagging far behind of any modern standards.
Russia had favourable fiscal conditions, but the government redirected its pubic wealth to a few private individuals close to the ruling elite rather than to its people. Today, income inequality in Russia is even higher than in the U.S. and China. And the war in Ukraine has made the situation worse.
Because people in the west want the Russian economy to collapse so they lose the war. The media is just preying on people’s wishful thinking. Same as the speculation a few years ago that Putin was dying. These stories implying an imminent crisis have been a winner for the media for years now.
These stories implying an imminent crisis have been a winner for the media for years now.
I don’t see any implication of a collapse in the above. I see factual reporting of the worsening state of the Russian economy. Those of us who are against Russia’s war of aggression in Ukraine celebrate every thing that shows economic struggles for Russia because the less money they have the less they have to spend on their unwarranted war, and the more they have to make hard decisions about whether money (or fuel) has to go to say farmers producing food, or to buying another thousand drones to hunt civilians with on the streets of Kherson
Well the sanctions haven’t been cutting it that’s for sure. But once again the biggest successes have come from Ukraine themselves, taking matters into their own hands and crippling refinement and shipping of Russia’s biggest export product. That won’t take any immediate effect on the war effort but it’s a big hit for sure. We will just have to wait how that pans out.
Vlad and don are more alike than I thought!
Imagine how many real streets and indoor toilets all this money would have bought for the russian people.
I don’t want to mock people pretending they don’t have indoor toilets.
I think the family put those in the farm in the 50s? And indoor plumbing wasn’t exactly new then
I don’t want to mock people pretending they don’t have indoor toilets.
Sadly, it’s not really pretending. This article is from 2019, but the situation isn’t much different today:
More than one-fifth of Russian households do not have access to indoor plumbing, according to official statistics obtained by the RBC news website on Tuesday.
and
In rural Russia, almost two-thirds have no access to indoor toilets, 48.1 percent of whom use outhouses and 18.4 percent do not have a sewage system.
Do they include septic in sewage? Because that’s terrifying. I never thought I’d want to arrange a Christian mission trip about toilets. I’m not even Christian!
I probably should’ve quoted this part, as well:
Of the 22.6 percent of households without a centralized sewage system, 16.8 percent use a system of pipes connected to pit toilets, RBC cited the State Statistics Service, Rosstat, as saying. The other 5.8 percent lack a sewage system altogether.
I guess piping sewage into an open pit counts as a kind of system, and it’s definitely septic.
The 5.8% who lack a sewage system are probably who we’re thinking of. Like I know a wastewater treatment plant that serves about 300,000 people. Part of their system is a shit drying field (the last step of extracting water from shit/shit from water, after they’ve done everything else that they can, is drying and then removing the dried shit. They’ve got a few fields for that). It’s not that different in abstract to me from pipes connected to pit toilets, but the wastewater treatment plant gets water out of their shit before the shit hits the pit. They send fancy shit to their shit fields I guess.
Then again I could be misreading. It’s late and I got 30 miles in on the bike today.
Is that a lot? Sounds like a lot.
Yeah, I think we can say that’s a lot.
Russia had planned a budget deficit of 3.8 trillion roubles for the entire year 2026.
But in January 2026 alone, the Kremlin posted already a deficit of 1.7 trillion roubles, nearly half of its full-year target, according to Russia’s Finance Ministry.
If you use the official exchange rate it is about 69billion€. It is 3% of their officially GDP. The big issue is that international creditors are unwilling to lend Russia anything and even domestic ones are not happy about it. Also I suspect Russian GDP growth is not going to be great.
Great to know thank you
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