Revised Russian Budget Forecasts $15 Billion Revenue Drop and Escalating Deficit

On Wednesday, Russia’s lower house, the State Duma, approved changes to the 2025 budget, forecasting a decrease of over $15 billion in revenues and an expanded deficit due to declining earnings from oil and gas.

The budget, which President Vladimir Putin endorsed last December, initially estimated revenues at 40.3 trillion rubles ($508.5 billion) and a deficit of 1.17 trillion rubles ($14.76 billion), representing 0.5% of GDP. This version allocated a historic 40% of total expenditures for defense and national security.

According to the updated projections, revenues are now anticipated to decline by 1.79 trillion rubles, bringing the total to 38.51 trillion rubles ($485.9 billion). The deficit is predicted to reach 3.79 trillion rubles ($47.8 billion), or 1.7% of the GDP, indicating an increase of 2.62 trillion rubles.

The adjustments reflect a strengthening ruble, decreased global oil prices, and an uptick in military spending.

Revenue from oil and gas is now expected to amount to 8.32 trillion rubles ($104.8 billion), which is a reduction of 2.62 trillion rubles from earlier forecasts. Conversely, non-oil and gas revenues are projected to grow by 829 billion rubles, rising to 30.19 trillion rubles ($380.3 billion).

In the meantime, the government intends to augment spending by 829 billion rubles, leading to a total of 42.3 trillion rubles ($532.9 billion).

In the first quarter of the year, Russia’s spending has already reached 11.2 trillion rubles ($141.1 billion), surpassing last year’s figures.

German economist Janis Kluge estimates that around a third of this amount—approximately 3.6 trillion rubles ($45.3 billion)—is classified, likely allocated for defense purposes. Since 2023, Russia has increasingly accelerated its military spending.

To manage the deficit, the government plans to withdraw 447 billion rubles ($5.8 billion) from the National Wealth Fund (NWF), which currently holds 2.8 trillion rubles ($36.4 billion) in liquid assets. Economists from the Kremlin have cautioned that, if current trends continue, the fund could be depleted by 2026.

The revised budget will now be submitted to the Federation Council, the upper house, for approval before being signed into law by Putin, who has made defense expenditure a priority.