Russia Registers A $29 Billion Deficit During Q1 2023
The recent reports reveal that Russia registered a budget deficit of $29 billion (2.4 trillion roubles) during Q1 2023. The fall in energy revenues and the heavy spending by Moscow are the chief reasons behind the budget deficit of Russia.
If we look at Q1 2022, Russia actually managed a 1.3 trillion roubles worth of surplus. This tells us that the heavy spending by Moscow and the country's military campaign in Ukraine is now taking a toll on the country's finances.
Russian Government Income Is Down By 20%
The finance ministry of Russia stopped publishing new updates on its monthly budgets. But the recent data suggest that the country had a 181 billion roubles worth of surplus during March. This surplus improved the country's budget deficit, but it still remains a big amount.
Overall, the government spending during this quarter reached 8.1 trillion roubles which is an increase of 34%. The military production, as well as state-funded spending, is keeping the industries afloat and is actually softening the economic impact of Western sanctions.
During March, the spending by the Russian government slowed a little bit, but it is still growing by 4.2% YoY when compared with February's increase of 33.9%.
And if we look at the government income during this quarter, it is down by 20.8% when compared with the same period last year. The biggest factor for this reduction in income can be traced back to lower energy revenues.
Russia relies heavily on income generated by the export of oil & gas products... In fact, a major part of the government's budget is funded by this sector alone.
In order to cover the budget deficit, the government has resorted to selling some of its international reserves. In addition, the sanctions on the country have also effected the value of the Rubble against other currencies.
According to Russia, its budget deficit during 2023 will not grow much further and will likely remain below 2% of the GDP.
But according to several economists, the budget deficit will easily exceed the 2% target set by the Russian government.