Budget revenues under pressure as the ruble remains too strong

RUSSIA ECONOMICS - In Brief 12 Dec 2025 by Evgeny Gavrilenkov

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The Ministry of Finance announced that in 11M25, total federal budget revenues hit R32.9 trln, up 0.7% y-o-y. Oil and gas revenues dropped 22.4% to just R8.0 trln, while non-O&G revenues rose 11.3% to R24.9 trln. The government had initially forecast R10.9 trln in O&G revenues for the year but now expects around R8.6 trln. The shortfall of R2.3 trln is mostly due to the unusually strong ruble, which has gained value since the start of the year amid sharply reduced demand for foreign currency. The USD/RUB rate staying below 80 reflects the heavy use of rubles and other “friendly” currencies in Russia’s foreign trade. Spending jumped 12.5% y-o-y, reaching almost R37.2 trln. Following several budget revisions, the Ministry of Finance now says total expenditures will top R42.8 trillion, meaning it’ll need to inject another R5.6 trln in December. As a result, monthly inflation could pick up again in the first couple of months next year. Federal revenues are expected to hit R32.9 trln this year, leaving a budget deficit of nearly R4.3 trln. Still, the shortfall shouldn’t be too large relative to GDP, which is projected to be about R210 trln or slightly higher in nominal terms. Questions linger over the 2026 fiscal and broader economic outlook, as the economy eventually has seemed less responsive to large-scale budget stimulus, with GDP now projected to grow by around 1.0% this year. For next year, the government expects total federal revenues to reach R40.3 trln rubles, with only a modest uptick in O&G income. It means the government expects the ruble to stay relatively strong, keeping pressure on domestic manufacturing and non-energy exporters. An estimated 8.6% growth in o...