(Reuters) – Russia’s federal budget recorded a 3.4 trillion rouble ($43.8 billion) deficit in the first four months of the year, the finance ministry said on Wednesday, as Moscow continued to spend heavily and energy revenue fell sharply.
In the same period of 2022 Russia posted a surplus of 1.2 trillion roubles, but since then significant outlays to support its military campaign in Ukraine and a wall of Western sanctions on its oil and gas exports have hit government coffers.
Rising military production and huge state spending are keeping Russia’s industry buzzing along, helping soften the economic impact of Western sanctions and allowing Moscow to plough on with its campaign in Ukraine.
The finance ministry stopped publishing individual monthly budget fulfilment data last year, but based on Wednesday’s figures, Russia posted a deficit in April of 1 trillion roubles ($12.9 billion).
That compares with a 181 billion rouble surplus in March and deficits of 821 billion roubles in February and 1.76 trillion roubles in January.
Just four months into the year, the spending gap in April took Russia’s deficit 17% above the government’s plans for a 2.9 trillion-rouble deficit in 2023 as a whole.
Spending was 26.3% higher in the first four months of the year compared with 2022, the preliminary data showed, while income was down 22.4%.
Finance Minister Anton Siluanov has repeatedly said Russia’s budget deficit this year would be no more than 2% of GDP, although most analysts disagree. The International Monetary Fund is among those expecting Russia to see a sharply wider budget deficit this year.
Siluanov recently said oil and gas revenues – down 52.3% year-on-year according to Wednesday’s data – would be crucial in Russia meeting the 2% target.
Amid falling revenues, Moscow has been forced to start selling international reserves to help cover the deficit.
Russia’s plan currently envisages debt issuance through OFZ treasury bonds of 2.5 trillion roubles, with another 1 trillion in borrowing permitted to replace spending from the National Wealth Fund (NWF).
Russia has spent 390.5 billion roubles covering the deficit from the NWF so far this year.
The central bank, which has held interest rates at 7.5% since September, has repeatedly warned that Russia’s budget deficit poses inflationary risks. ($1 = 77.7205 roubles)
(Reporting by Darya Korsunskaya; Writing by Alexander Marrow and Jake Cordell; Editing by Jan Harvey and Alex Richardson)
