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Off Budget: Russia’s Oil Revenues Decline Sharply

ūüĎČ In the first five months of 2023, the Russian government has generated approximately US$37bn in gas and oil tax revenues. This represents a 50% decrease compared to the previous year. The most significant decline is observed in export taxes. It appears that even the Russian Ministry of Finance was expecting higher revenues, as the budget for the period January to May 2023 included about US$5.5bn more.

ūüĎČ Overall, the Russian state budget is plunging deep into deficit. In just the first five months, the projected annual deficit has been already exceeded by 117%, according to the Ministry of Finance. As of the end of May, the budget deficit stood at RUB3.4trn (approx. US$40bn), exceeding the planned amount for the whole year of RUB2.9trn (approx. US$3bn).

ūüĎČ Falling tax revenues suggest that oil sales revenues have also fallen. Tax revenues from gas and oil are by far the most important source of income for the country. If energy prices continue to fall and the global economy experiences a sluggish or even recessionary trend, the Russian treasury could face a serious problem. However, the Russian National Wealth Fund, with a volume of around US$156bn, could provide a solution. The Ministry of Finance plans to tap into the fund to compensate for the shortfall in oil revenues…