The extent of Russia’s budget deficit has been studied

In January 2023, Russia’s oil and gas revenues fell sharply, leading to the largest budget deficit in January since 1998.

In January, tax revenues for oil and gas decreased by 46%, and expenses for the war in Ukraine increased by 59%.

The January 2023 deficit is 14 times higher than the January 2022 figure. For comparison, in January of last year, the Russian budget had a surplus of 125 billion rubles ($1.6 billion).

Russia’s budget deficit is expected to continue to widen until the end of 2023, with the current forecast pointing to a potential deficit of 2.93 trillion rubles ($41.3 billion).

The decrease in income from the sale of oil and gas can be explained by the sanctions imposed by Western countries on Russian exports. The European Union continued to observe the embargo on Russian oil exports, while the price ceilings set by the G7 countries for Russian oil also have an impact.

The decline in Russian gas export volumes has reduced Russia’s profits. In addition, Russia has lost the largest market for gas.

Budget revenues not related to energy fell by 28% in January. The Russian government has partly explained this by the fact that the rules regarding value added tax have been changed.

Experts have pointed out that the drop in oil and gas revenues was not a surprise, but the 30% drop in other tax revenues related to domestic consumption was surprising.

Economists predict that income from oil and gas will continue to increase Russia’s budget deficit.