Russia’s budget surplus has all but disappeared over the summer, according to data released by the Russian Finance Ministry this week. At the end of June, the surplus stood at 1,370 billion rubles ($23 billion); by the end of August, it had fallen to just $137 billion ($2.3 billion).
Revenues are under pressure. Oil has traditionally been a larger component of Russia’s budget than natural gas, and prices for Brent crude – the European benchmark – have fallen about 25% since their peak in early June.
Spending has also risen sharply, both on the military and on measures to shield the economy from the impact of stinging Western sanctions, according to Janis Kluge, senior associate at the German Institute for International and Security Affairs. .
He says real-time data from the Russian government indicates the budget is now in deficit, adding that the hole in the Kremlin’s finances could widen as military spending increases.
“Military spending was originally expected to be 3.5 trillion rubles this year, but that level was probably already exceeded in September,” Kluge told CNN in emailed comments.
Russia’s business daily Vedomosti reported on Wednesday, citing sources close to the government, that the Finance Ministry had told government agencies they should cut spending by 10% in 2023. Defense spending, however, is expected to rise, Vedomosti said. citing a source close to said the Ministry of Defense.