Russia’s budget deficit will grow strongly in 2023
2023.02.24 07:45
Russia’s budget deficit will grow strongly in 2023
By Tiffany Smith
Budrigannews.com – An analysis obtained by Reuters on Friday from the European ratings agency Scope indicates that Russia’s budget shortfall will significantly widen this year as a result of lower revenues from oil and gas exports.
According to the analysis, Scope anticipates a deficit of 3.5% of GDP, which is significantly higher than the government’s forecast of 2%. The official shortfall was 2.3% in 2022.
According to the statement, “Sanctions and the war are constraining Russia’s fiscal flexibility… due to lower energy export revenues, higher spending related to the war, and a steady decline in GDP.”
“For the time being, Russia can easily finance its deficit by drawing down the National Wealth Fund, which is expected to be only 3.7% of GDP by the end of 2024, down from 10.4% of GDP at the end of 2021.”
Issue domestic bonds to state-owned banks backed by liquidity provided by the Bank of Russia is yet another strategy for reducing the deficit.
Scope claims that the Russian economy will suffer long-term harm as a result of the high level of defense spending, which comes at the expense of investments in housing, digitalization, infrastructure, and environmental protection.
In an interview that was broadcast a week ago, Russia’s Finance Minister Anton Siluanov stated that the country was sticking to its forecast of a deficit of 2% of GDP for the year. However, analysts have pointed out that the deficit may end up being larger if the current spending and revenue dynamics continue.
Western nations want price caps on Russian oil to cut into the Kremlin’s war chest for its second-year invasion of Ukraine, which began on Friday.
