Russia’s Ministry of Finance has raised its 2024 budget deficit expectations to 2.12 trillion roubles ($23.76 billion) or 1.1 percent of the country’s gross domestic product (GDP), according to the latest budget amendments submitted to parliament. The ministry lowered total revenue expectations for 2024 by 2.8 billion roubles to 35.06 trillion roubles. Meanwhile, it increased expected spending by 522 billion roubles to 37.18 trillion roubles.
Oil and gas revenues to decline
In addition, Russia reduced its forecast for additional oil and gas revenues by 767 billion roubles to 1.05 trillion roubles. The ministry traditionally uses oil and gas revenues to buy foreign currency and replenish the country’s National Wealth Fund. In its previous estimate, Russia expected a budget deficit of 1.595 trillion roubles or 0.9 percent of GDP.
As the country’s spending increases while oil and gas revenues drop, the country has witnessed two consecutive annual deficits exceeding 3 trillion roubles, about 2 percent of GDP since 2022. According to ministry estimates, the deficit according to the first four months of 2024 was at 1.48 trillion roubles or 0.8 percent of GDP.
Tax hikes to raise budget revenues
Russia’s government last week proposed tax hikes for companies and wealthy individuals in an effort to support its budget revenues and decrease its deficit. This tax hike could add an extra $30 billion to next year’s budget revenues. This change will support the president’s infrastructure and social spending pledges which amount to over 11.5 trillion roubles ($128 billion) for his new six-year term.
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