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War in Ukraine

Russian Budget Revenues In 2025 Cover Only a Little More Than Half of Government Spending

Russian Budget Revenues In 2025 Cover Only a Little More Than Half of Government Spending

On Tuesday, March 11, the Russian Ministry of Finance released data on the execution of the federal budget for the first two months of 2025. The Russian treasury has faced a record budget deficit, which in just two months has already exceeded the planned annual target.

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oleksandr_moiseienko
Oleksandr Moiseienko
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In February 2025, Russia’s budget deficit increased by 60% compared to January 2025. Budget revenues are insufficient due to rising expenditures amid declining oil and gas revenues.

For the first two months of the year, budget expenditures exceeded revenues by 2.7 trillion rubles ($27 billion). Previously, the Russian State Duma approved the federal budget for 2025, in which the government planned to maintain the deficit at no more than 1% of GDP.

However, in just the first two months of this year, the budget deficit reached 1.3% of GDP. A year ago, for the same period, the deficit was 1.13 trillion rubles ($11 billion). This means the deficit has more than doubled year over year.

Since the beginning of the year, budget expenditures have amounted to 8.05 trillion rubles ($80 billion), which is 30.6% more than in the same period last year.

In 2025, the Russian treasury plans to spend over 41.5 trillion rubles (more than $415 billion). Amid high inflation and rising taxes, the Russian Ministry of Finance continues to collect significant revenues, but they remain insufficient against record-high expenditures.

While budget expenditures have increased by 30% compared to last year, revenues for the same period have risen by only 6.3% year over year.

The main factor in revenue growth was non-oil and gas revenues, which increased by 11.1%, reaching 3.78 trillion rubles ($37 billion). Meanwhile, oil and gas revenues declined by 3.7% compared to the same period last year, amounting to 1.56 trillion rubles ($15 billion).

The Russian Ministry of Finance attributed the increase in spending at the beginning of the year to the advance payment of certain contracts, stating that this would not affect the budget’s target parameters for 2025.

However, such claims appear overly optimistic, especially given the increasing sanctions pressure on the oil and gas sector, imposed at the end of the Biden administration.

"Oil and gas revenues in January-February of this year exceeded their base level, but there are risks of a decline due to weaker price conditions," acknowledged the Russian Ministry of Finance.

For the past three years, since Russia launched its full-scale invasion of Ukraine, the Russian budget has recorded an annual deficit of over 3 trillion rubles ($30 billion) due to record-high military expenditures.

Traditionally, the Ministry of Finance has covered the growing deficit by borrowing from the National Wealth Fund—a reserve established to accumulate excess revenues from oil and gas sales for a "rainy day." However, by early 2025, the level of liquid assets in the fund had fallen to its lowest level since 2008, the year the fund was created.

Thus, in just three years of war, Russia has spent savings accumulated over 15 years. As of early March, the liquid portion of the fund stood at only 3.4 trillion rubles ($34 billion), which is roughly equal to the budget deficit for the first two months of the year.

This year, Russia’s military spending is expected to surpass a record-breaking $140 billion. 2025 will be the first year in which Russia’s oil and gas revenues fail to cover military expenditures.

United24 Media has previously reported that, amid serious fiscal challenges, the Russian government may be forced to take several unpopular measures in 2025 to continue the war, including devaluing the national currency and raising taxes.

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