According to information compiled from the institutions in Russia, the country’s budget decreased 3.3 trillion rubles (about 40.7 billion dollars) in the first four months of the year.
In the expectation of 2025, the Russian Ministry of Finance increased the budget deficit to the gross domestic product (GDP) from 0.5 percent to 1.7 percent, while the Russian ruble is forced to gain a significant value against foreign currencies this year.
While the rubles gain close to 30 percent against the dollar this year, the budget revenue obtained from exports weakens, while the country’s main export pencil decrease in oil price, increases the negative impact on the budget.
The strict monetary policy implemented by the Central Bank of Russia to reduce inflation at 10 percent on an annual basis stands out as another element that slows the economy.
Decrease in oil prices
The barrel price of Brent oil, which started the year at a level of $ 75, went down to below $ 60 due to the tariff battles initiated by US President Donald Trump.
Prices, thanks to the trade agreement reached between the United States and China again to the $ 65 band, while the possible recession in the global economy, the prices continue to suppress the prices.
This decrease in the price of the most important economic income source of Russia, one of the world’s largest oil producers, adversely affects the budget balance in the country.
Russia, which sells Ural oil with a discount of approximately 10 dollars per barrel compared to Brent due to sanctions, is expected to take measures to meet the increasing financial burden with a significant increase in defense expenditures in the last three years.
Russian Finance Minister Anton Siluanov said on May 6, said the budget deficit will increase due to falling oil and natural gas revenues, said that this year will be spent 447 billion rubles from the National Asset Fund this year.
The country’s reserves at the National Welfare Fund increased by 0.34 percent in April to 11.79 trillion rubles (about $ 145.7 billion).
Analysts warn that possible tax increases in the country may also come to the agenda, while the state can take steps to devalu the ruble to increase export revenues.
On the other hand, if the rubles are devaluated, the private sector may force the possibility of further hardening of the tight monetary policy applied.
Kremlin spokesman Dmitriy Peskov, in his assessment of the oil prices and possible effects on Russia on Russia, said, “Oil prices cannot be a factor that may affect Russia’s national interests. Russia’s national interests come before everything, including oil prices.” He used his statements.
The fight against inflation continues in Russia
In addition to sanctions and falling oil prices in Russia, another element that affects the economy is the strict monetary policy implemented by the Central Bank of Russia.
Inflation rate in the country, since the beginning of the war, more than 4 percent of the targeted, while in March, more than 10 percent.
Increasing expenditures in the defense industry are an important reason for the increase in inflation and overheating in the economy, while the increased personnel demand in this area and the army leads to an increase in inflation.
Companies have made significant increases in salaries in order to close the increasing employment deficit.
According to the Russian Federal Statistical Institute (ROSSTAT), salaries in the country rose nominally 18 percent.
The Central Bank of Russia decided to keep the policy rate fixed at 21 percent at the record level at a meeting on 25 April.
Analysts point out that a possible agreement with Ukraine may have a positive impact on the Russian economy by alleviating sanctions in the medium and long term, although not in the short term.
In the event that the war is prolonged, analysts united in the view that the difficulties will deepen, especially in the European wing, share the view that new extensive sanctions are prepared against Russia and the problems in the economy will increase even more.
