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War in Ukraine. Russia’s budget in worse and worse condition – preliminary data of the Russian Ministry of Finance

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Russia’s budget deficit in January-February 2023 increased to 2.58 trillion rubles, which is equivalent to $34.19 billion. This is according to the preliminary data of the local Ministry of Finance, which was published on Monday. Reuters pointed out that falling revenues from energy sales and soaring spending contributed to the widening of the deficit.

Reuters noted that although the economy Russia proved surprisingly immune to Western sanctions introduced last year, is a return to pre-invasion levels Ukraine may be remote as more government spending is channeled into the military and commodity price caps limit key budget revenues.

Budget of Russia 2023

The Russian Ministry of Finance, referring to preliminary data, informed that revenues from oil and gas sales in the period January-February this year were by 46.4 percent (947 billion rubles) lower than in the same period a year earlier. In total, budget revenues fell in the first two months by nearly a quarter (24.8%).

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On the other hand, budget expenditures were 51.5% lower than in the previous year. higher and amounted to 5.74 trillion rubles. In the same period last year, Russia recorded a budget surplus of 415 billion rubles.

Reuters noted that Moscow relies on oil and gas revenues to finance its budget spending. Last year, the proceeds from this account came close to 11.6 trillion rubles. Now Russia has been forced to start selling its foreign reserves to cover the cost-stretched deficit conflict in Ukraine.

At the same time, however, Russia managed to find new recipients of raw materials and thus redirect oil exports from Europe, mainly to India, China and Turkey. In addition, according to Reuters, Moscow also manages to sell oil above the price limits set by the West, which weakens the impact of sanctions.

G7 countries, Australia and European Union agreed to set a price ceiling for Russian crude oil transported by sea at the level of USD 60 per barrel. The regulations came into force on December 5, 2022. The limit works by prohibiting the provision of services related to the transport of crude oil by sea, including insurance and financial services, for crude purchased at a price exceeding the set ceiling of $60 per barrel. In addition, from Feb. The EU embargo on imports of Russian fuels came into force.

Main photo source: EPA/YURI KOCHETKOV



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