Russia's budget deficit falls thanks to strong oil, lower spending

Russia's budget deficit fell to 0.2 per cent of gross domestic product ( GDP ) in August from 0.7 per cent a month earlier, as both oil and gas and non-energy budget revenues rose while spending slowed, the finance ministry said on Friday.

The January-August 2024 deficit was significantly lower than the 1.2 per cent of GDP in the same period last year when Western sanctions over Moscow's invasion of Ukraine, including an oil price cap and oil embargo, were squeezing its energy revenue.

The January-August 2024 deficit stood at 331.4 billion rubles ($3.69 billion), according to the ministry's data, compared with 2.13 trillion roubles in January-August of last year.

The ministry said budget revenues increased by 35.5 per cent to 23.03 trillion roubles compared with the same period in 2023. Non-energy revenues were up by 27 per cent, and the ministry noted their "sustainable positive dynamics".

In August, budget revenues were 23.3 per cent higher than in the previous month and 32.8 per cent higher than in August 2023. Russia's largest lender, Sberbank, paid 376.1 billion roubles in dividends to the budget last month.

Energy revenues surged by 56.2 per cent thanks to higher-than-projected prices for oil, Russia's main export commodity, the ministry said.

Overall spending in January-August was 23.36 trillion roubles, 22.2 per cent higher than in the same period of 2023. Russia continues to direct huge financial resources to the defence sector for its war in Ukraine.

However, spending slowed in August to 2.51 trillion roubles compared to 3.15 trillion roubles in July.

Russia expects budget revenues and expenditures to sharply rise in 2024, planning to spend 37.18 trillion roubles over the year and attract 35.06 trillion in revenue, leaving a full-year deficit of 1.1 per cent of GDP , or 2.12 trillion roubles.