Russia's Budget Deficit Has Increased
- 10.11.2026, 23:17
Despite record-high oil prices.
The federal budget deficit widened again in October, despite Russian oil prices rising to a 12-year high.
As reported by the Russian Ministry of Finance on Tuesday, government spending for January–October exceeded revenue by 5.23 trillion rubles, or 2.3% of GDP. Over the course of the month, the budget deficit widened by 48 billion rubles, even though the budget had posted a surplus in September and August, according to The Moscow Times.
Compared to the same period last year, the budget deficit increased by one-third, or 1.292 trillion rubles, and its current size is nearly one and a half times the initial plan for the entire year (3.6 trillion).
According to the Ministry of Finance, oil and gas revenues fell by 14% over the first nine months, to 6.444 trillion rubles. Revenues from non-resource sectors of the economy rose by 19%, to 26 trillion rubles. The VAT increase brought 3.2 trillion rubles in additional revenue to the budget: VAT collections rose by 27%.
The budget situation for the Kremlin is deteriorating as the cost of the war rises, notes Janis Klugé, an expert at the German Institute for International Security Affairs. Between 2022 and 2025, the Kremlin spent 47 trillion rubles on the military and weapons production—equivalent to 26 annual budgets for the country’s entire higher education system. The budget for the current year allocated 12.9 trillion rubles for “national defense,” but actual spending will amount to about 17 trillion, according to Bloomberg sources.
The 2027 budget draft includes 17.1 trillion rubles in military spending, and 50 trillion over three years. “War remains the top priority of Moscow’s economic policy. And this threatens to further widen the budget deficit, which has failed to turn into a surplus for the fifth consecutive year,” notes Iikka Korhonen, head of the Institute for Emerging Economies at the Bank of Finland.
“The government is preparing to live with a chronic deficit while simultaneously increasing fiscal extraction from the economy,” states Yaroslav Kabakov, a strategist at Finam. According to the budget law, next year government revenues will fall short of expenditures by 5.4 trillion rubles, and the cumulative “shortfall” for 2027–29 will total nearly 16 trillion rubles.
In response, the Kremlin will continue to raise taxes, says Sofya Donets, chief analyst at T-Investments. “Everyone will pay taxes, and the longer we remain in this difficult situation, the more everyone will feel the impact,” she told Reuters. “In any case, there will be a decline in living standards… There is only one way out, and it lies not in the realm of economic policy, but in the realm of politics and geopolitics.”