Russia triples 2025 budget deficit but keeps defense spending
Russia has tripled its budget deficit forecast for 2025, primarily due to falling oil prices. The Kremlin does not plan to cut defense spending. The Russian finance minister announced that support for "families of participants in the special military operation" will remain unchanged.
What do you need to know?
- Russia has tripled its budget deficit forecast for 2025. Falling oil prices and a strengthening ruble have forced the government to revise its forecasts.
- Finance Minister Anton Siluanov emphasized that defense remains a priority. Defense spending and social support for the families of "military operation participants" will be maintained regardless of external conditions.
- Russia has already raised several key taxes. This includes income tax on individuals and corporate profit tax.
Falling oil prices and a strengthening ruble have led the government to adjust its federal budget revenue forecasts downward by 4.5%.
Revenues are expected to sharply decline from a previously forecasted 40.3 billion rubles to 38.5 billion, while expenditures will rise from 41.5 billion to 42.3 billion rubles, according to the Nexta portal, which notes that this is a record deficit.
Observers note that up till now, solid finances have helped Russia withstand global crises. However, the risk this year is intensified by the rising costs of the war in Ukraine and Western sanctions.
Russia with a budget gap. The Kremlin will not economize on defense
Overall, due to cheap oil, the state treasury will lose 2.6 billion rubles in oil and gas revenues. As a result, the budget deficit is expected to more than triple, from 0.5% to 1.7% of GDP.
According to the Moscow Times portal, Finance Minister Anton Siluanov has stated that defense remains the most important budgetary priority.
He affirmed in a statement that all items outlined in the budget would be carried out as planned, regardless of prevailing conditions or external factors. This commitment includes continued social support for citizens, sustained funding for defense and national security, as well as assistance for the families of those involved in the special military operation.
Many analysts believe that if the government wants to balance future budgets without cutting defense spending, it will have no choice but to raise taxes, cut sensitive social spending, and take out loans, according to Reuters.
The agency notes that Russia has already raised several key taxes this year, including the socially sensitive income tax on individuals and corporate profit tax.
