RF Ministry Of Finance Announced Budget Expenditure Cuts
- 27.05.2026, 19:59
Because of the problems in the Russian economy.
The Russian Finance Ministry is working on editing the current year's budget due to "changes in macro conditions," the head of the ministry Anton Siluanov told "Kommersant" in an interview.
According to him, officials are assessing the expediency of spending on all items except for "absolutely priority" items - defense and social commitments.
"Federal budget expenditures have been growing at a faster pace in recent years. Since 2019, they have grown by almost 3.5 percentage points of GDP - from 16.6% to 20.0% in 2025, an increase in money by more than 2.3 times," Siluanov cited statistics.
"All this requires considerable resources. <�...> The reserves accumulated in previous periods have been utilized. These are both the National Wealth Fund and current rent incomes. <�...> Nevertheless, the reserves are not infinite," the minister emphasized. He added that budget expenditures now "require a certain restraint".
This year, the Finance Ministry may be forced to "optimize" budget spending by 300-700 billion rubles, according to economist Dmitry Polevoy. The reason is a sharp deterioration in the economic growth forecast for the current year (from 1.2% to 0.4%), which means a corresponding reduction in the taxable base. In 2027, due to lower GDP growth rates, the shortfall in revenues against the budget plan may already amount to Br1.3-1.8 trillion. And this means the need to reduce expenditures, or to find the same amount of additional revenues, emphasizes Polevoy.
After January-April, the federal treasury has already received Br5.8 trillion in deficit - twice as much as in the same period last year, and 1.6 times more than the plan for the whole year. Expenses (Br17.6 trillion) were 1.5 times higher than revenues (Br11.7 trillion). In other words, every third ruble spent by the government was not supported by tax revenue.
The current size of the deficit already exceeds the balance of liquid funds in the National Welfare Fund (3.63 trillion rubles) by more than 60%, writes economist Kirill Rodionov. "Against the backdrop of undersupplied oil and gas revenues, a slowing economy and rising debt servicing costs, there is no other serious possibility to balance the budget except through a noticeable reduction in "non-interest" expenditures. This is what the government is likely to have to do already this year," he believes.
But in order to simply fulfill the budget deficit plan for the end of this year, the Ministry of Finance now needs to keep the treasury in surplus by 200 billion rubles every month, analysts at Gazprombank say. This is hardly realistic: by the end of the year, the "hole" in the budget will amount to 5-5.5 trillion rubles and will again fall short of the plan, they believe.
The unchanged geopolitical situation may make it extremely difficult, if not impossible, to cut expenditures, Polevoy believes. In his opinion, officials may have to look for new revenues by raising taxes.
"Any additional measures to mobilize revenues, including through windfall tax or other taxes, will only increase the risks for the economy... Corporate profits in 2026 continue to fall, many private companies no longer have a margin of safety, small businesses are "holding on" from their last strength, so any additional fees will only aggravate the situation," the expert warns.