If one looks at the budgets adopted between 2008 and 2016, it is possible to see that the revenues differ from those envisioned for the third year by 28 percent on average (caused by outpacing the revenues and being short in them),and the spending differs by 12 percent (in 2016 the gap was the largest ever recorded, reaching 42 percent).

It is worth noting that in the framework of a three-year budget, the budget deviation may become bigger than 50 percent. Nevertheless, the Russian Finance Ministry still drafts three-year budgets, and the State Duma approves them with little debate and quite insignificant amendments. For 2022, the revenues were forecast at 25 trillion rubles while the appropriations at 23.7 trillion rubles; the most recent projections put them at 27.6 trillion rubles and 29.4 trillion rubles, thus turning a provisional 1.33-trillion-ruble surplus into a 2.9-trillion-ruble deficit.

The Cost Of War Outweighs All Additional Revenues

Of course, the year 2022 was marked by Russia’s military invasion of Ukraine, and, because of the war, almost all economic projections went bust immediately after February 24. However, despite the Russian aggression and the sanctions it has caused, federal revenues exploded in mid-2022 as the gas and oil prices surged in Europe, and the local energy companies did their best to intensify imports from Russia almost until the moment the oil embargo came into force on December 5.Natural gas supplies had gone down since June and came almost to a standstill after the North Stream pipeline was blown up on September 26.

In fact, thanks to oil and gas export duties as well as commodity extraction tax and profit tax both paid by the oil and gas companies, the Russian federal budget reported an excess of 11.5 trillion rubles in the so-called “oil-and-gas revenues,”which is by far the largest amount ever. Yet, even in such circumstances, the cost of war outweighs all additional revenues. Since August, the monthly budget calculations show that the Kremlin is running into increasing deficits, forcing the Finance Ministry to take a trillion rubles from the National Wealth Fund and to borrow 1.4 trillion rubles on the domestic market (from October to early December), even while the limit for such borrowing was put at 150 billion rubles for the entire fourth quarter. It is exactly in this period of time that the government sent to the State Duma its 2023 budget proposal, which was voted for on November 24 and signed into law by President Putin on December 5, but which I would call one of the strangest ever adopted.

Read The Full Report   www.mesop.de