From FT based on official Russia numbers: Despite record high sales, its deficit is 2% of GDP. And this is after just one month of sanctions that kicked in in Dec.
But the Russia crowd is celeberating that may be Russians have taken a town of 10,000. May be while Russia's 1% surplus is a 2% deficit.
Moscow’s record oil and gas revenues fail to cover war cost
ANASTASIA STOGNEI — RIGA
The war in Ukraine is costing Russia more than it took from record oil and gas revenues, with the country’s budget gap widening significantly in 2022.
The public deficit for last year was 3.35tn roubles ($48bn) or 2.3 per cent of gross domestic product, said finance minister Anton Siluanov. Before Russia invaded Ukraine in February last year, Moscow had predicted a budget surplus of 1 per cent and in December it forecast a deficit of 2 per cent.
This official admission of worsening public finances comes despite record oil and gas revenues as a result of persistently high energy prices and Moscow’s ability to redirect its oil exports to Asia.
In 2022, revenues grew 10 per cent year on year but overall spending soared by 26 per cent. Budget spending details for 2022 are not available publicly as the ministry classified them in June due to “the US, the EU and other unfriendly countries’ pressure on Russia”.
“We do not understand the costs’ distribution, but we can assume that they largely went to the military financing. In September, planned spending increased by Rbs2tn compared with summer estimates. Then in December it rose by the same number again,” said Renaissance Capital economist Sofya Donets.
Moscow covered the deficit by redirecting money from its sovereign wealth fund, state borrowing and a windfall tax on Gazprom, the state gas monopoly.
“We have fulfilled all our planned tasks despite the geopolitical situation, restrictions and sanctions,” Siluanov said at a government meeting. “We have increased the spending . . . and this money was primarily used to support people.”
He mentioned increased pensions and a prolonged subsidised mortgage scheme but did not discuss the war. “We have also decided to finance some of the 2023 expenses in 2022 to sustain a stable budgeting process,” he added.
The minister said that a 2.3 per cent deficit estimate included transfers to social security and other non-budget funds, which did not receive some payments due to respite granted to businesses by President Vladimir Putin.
Russia’s conservative fiscal policies have helped to stabilise its fiscal position. But western sanctions that come into full effect this year will put more strain on budget financing.
The Urals, Russia’s flagship crude blend, is trading below $40, lower than the $70 set up in its budget law for 2023. The budget law projects defence spending to grow by 3.5tn to account for 30 per cent of all state spending in 2023.