Federal budget deficit widens

RUSSIA ECONOMICS - In Brief 12 Nov 2025 by Evgeny Gavrilenkov

---

With the 2026 budget nearing final approval in the State Duma, the 10M25 federal revenue figures were underwhelming. The Ministry of Finance reported overall revenue growth of just 0.8% compared to 10M24. Oil-and-gas revenues dropped 21.4% y-o-y, while non-O&G revenues rose 11.3%. Total revenues stood at R29.924 trillion, with O&G making up about 25% of the total. As spending jumped 15.4% y-o-y to R34.113 trillion, the budget deficit widened to R4.19 trillion.The Ministry of Finance now expects total federal budget revenues to hit R37.1 trillion, while expenditures will climb to R42.8 trillion, surpassing both the original plan and the revised target from a couple of months ago. The deficit is projected to slightly exceed R5.7 trillion—compared to last year’s initial target of R1.2 trillion and the amended R3.8 trillion—and reach about 2.6% of GDP this year. It also seems likely that the final 2026 budget will change, as its current deficit target of R3.8 trillion is roughly the same as what the government anticipated for 2025 and more borrowing could be required.The federal budget has become less reliant on oil and gas revenues as their share of total income has dropped with falling oil prices. Still, oil prices and oil production volumes only partly account for the weak revenue growth. A particularly strong ruble is a major issue, not just for the budget but for the whole economy. An overly strong ruble cuts into export duties, mineral resource taxes, and VAT from imported goods. This creates a vicious cycle where the strong ruble hurts local manufacturers’ competitiveness, and with imports rising, VAT revenues from imports remain lackluster. As a result, the budget ...