revenues down 35% and expenses up 59% – Corriere.it

Russia’s Finance Ministry released a note on Monday February 6 that it contains the trend of the federation’s public finances after a year of war. In summary, the revenue plummeted 35% and expenses exploded 59%. The figures re-propose the theme of Western sanctions: are they working? And to what extent do they put the Moscow economy on the ropes? The data released by the Ministry of Finance tip the scales for an affirmative answer. But just last week the International Monetary Fund had estimated that the Russian economy will contract by 2.2% in 2022 (much less than the initial forecasts) and will grow by 0.6% next year.

The budget

Whatever the answer, the note from the Kremlin points out right away that the volume of federal revenues in January 2023 amounted to 1,356 billion rubles, which is 35% lower than in January 2022. Important data are revenues from the sale of hydrocarbons which constitute the main item of the economic balance of Russia: these are almost halved in a year, being precipitated by 46%. Revenues from non-oil products decreased by 28%. Even under the expense item, the state budget is not brilliant: the ministry certifies that these amounted to 3,117 billion rubles in January 2023 exceeding the figures for the same period last year by 59%.. The budget hole would therefore amount to about 1,800 billion rubles (equal to about 24 billion euros). A situation that could worsen if gas prices (which have dropped to pre-attack Ukraine levels) remain low.

Future perspectives

How to remedy this situation?

According to the International Economic Agency BloombergPutin is doing pressures onBank of Russia to be more optimistic about the outlook of the economy and signs that it is ready to ease monetary policy. Request (in particular that of easing interest rates) which however would be meeting the resistance from the governor of the central bank, Elvira Nabiullina.