Russia Plans Budget Cuts Amid Record Deficit and Rising Oil Prices
In early 2026, Russia's federal budget deficit reached 3.45 trillion rubles, leading authorities to prepare for spending cuts, excluding military expenditures. Oil and gas revenues fell significantly despite rising global oil prices, and the government has increased taxes, including VAT. Non-oil revenues grew modestly by 4.1%. The Finance Ministry indicated cuts across all expenditures, with a focus on non-sensitive items, while key areas like defense and social policies are likely to remain protected.
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As of early 2026, Russia's federal budget deficit reached 3.45 trillion rubles, representing 1.5% of GDP. Oil and gas revenues were 826 billion rubles, significantly below forecasts, with a near 50% decrease from the previous year.
The budget was based on an assumption of $59 per barrel of Urals oil, while actual prices were much lower. The government anticipates a need to cut expenditures by approximately 1-2 trillion rubles, primarily affecting economic projects, while essential spending on defense and social policies is expected to remain intact. Rising oil prices due to geopolitical tensions have not fully alleviated budgetary pressures.
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