COMMENT: Falling oil revenues and rising costs triple Russia’s budget deficit, but to a manageable 1.7% GDP

Russia has already spent more than a third of the planned budget expenditures for this year as costs in all three of the major spending categories – housing, social, and military – are up year on year.

As Russia moves to amend its 2025 federal budget and update projections for 2026 and 2027, it is confronting the consequences of a slowing economy, lower-than-expected oil and gas revenues and a deepening dependence on military spending.

The revised budget forecast has already seen the federal budget deficit triple to 1.7% of GDP this year, up from the previously expected 0.5%, according to documents introduced to the State Duma on May 25.

That is still not a disaster. The deficit was 2.3% in 2022 after the start of the war, falling to 1.9% in 2023 and 1.3% in 2024. This year the deficit was supposed to fall again to 0.5