GDP falls by 2.3 percent in 2022
Russia’s budget deficit is 3.3 trillion rubles
01/10/2023 4:53 p.m
In recent years, energy exports have made the coffers of the Russian state overflow, but that now seems to be over. In 2022, Russia will have to fill a budget deficit of 3.3 trillion rubles. The reasons are the invasion of Ukraine and the sanctions of Western countries.
The Russian state was in the red last year because of the high costs of the war against Ukraine. The deficit adds up to 3.3 trillion rubles (around 44 billion euros), as Finance Minister Anton Siluanov announced. This corresponds to 2.3 percent of gross domestic product (GDP).
Before the war began on February 24, the government had aimed for a surplus of 1 percent of economic output. Last September, President Vladimir Putin forecast a surplus of almost half a trillion rubles. In recent months, however, the government has been forced to tap into billions in sovereign wealth funds and to take out new loans at auctions from domestic lenders. The reason for this is that more funds are being diverted to the defense budget.
Siluanov recently acknowledged that the western price cap on Russian oil could widen the budget deficit in 2023. “Is a larger budget deficit possible? It is possible if revenues are lower than planned,” the minister told reporters. “What are the risks over the next year? Price risks and constraints.”
Hardly any recovery in 2023
The Russian economy has held up comparatively well in the face of massive Western sanctions over the war against Ukraine. According to the fall forecast of the International Monetary Fund (IMF), GDP is likely to have fallen by 3.4 percent in 2022 and could fall again by 2.3 percent in 2023.
The Russian central bank recently warned of increased economic risks as a result of the war. “The labor shortage is increasing in many sectors due to the effects of partial mobilization,” said the monetary authorities. Since September, this has led to hundreds of thousands of Russians either being drafted into the army or leaving the country. They are no longer available for the job market.