Russia’s federal budget deficit worsened to a record level in December, driven by limits on oil exports at a time when spending on the invasion of Ukraine increased, according to a Bloomberg report.
Last month’s fiscal imbalance was a record-high of 3.9 trillion roubles ($56 billion), according to calculations by Bloomberg based on unofficial government statistics provided on Tuesday.
As a result, the annual shortfall increased to roughly 3.3 trillion roubles, turning around an excess in the first 11 months of the year. The Finance Ministry is anticipated to reveal more comprehensive data shortly.
However, the ministry did not immediately react to a request for comment, reported Bloomberg.
According to preliminary figures, spending for the year increased by more than a third from pre-war projections. Government spending in Russia is mostly seasonal, with significant increases frequently occurring at the end of the year, resulting in a larger deficit.
In the first half, exports of high-priced goods like oil, gas, and other commodities helped offset spending increases, but the pattern is gradually changing.
Following the Group of Seven (G7) nations’ imposition of a cap intended to curb the Kremlin’s profits, the price of Russian oil plunged.
To make up the difference, the government has already begun to cut back on or postpone non-war spending and is considering raising taxes on some large corporations.
Due to years of stringent measures implemented before the invasion, Russia’s financial condition is robust despite the pressures.
According to projections, the deficit for this year will be 2 per cent of GDP, which is the same as the deficit for 2022. But, the current forecast is based on an oil price of $70 per barrel, about $20 above levels seen in December.
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