Russian budget loses 20% of oil and gas revenues for second month in a row

Forced discounts on Russian oil due to tougher US sanctions and a sharp strengthening of the rouble have hit the Russian budget's raw material revenues.

Source: The Moscow Times

Details: According to the Russian Ministry of Finance on 3 April, tax revenues from oil and gas decreased by 17% year-on-year to RUB 1.08 trillion (about US$13 billion) in March.

In monetary terms, compared to March 2024, the budget lost about RUB 230 billion (US$2.7 billion) in taxes.

According to the newspaper, the Ministry of Finance has recorded a decline in raw material rents by almost 20% for the second month in a row.

"The situation is sensitive. These are significant losses that will need to be covered either by additional borrowing or by using the National Welfare Fund (NWF), which has a small amount left," said Sofia Donets, chief economist at T-Investments.

She estimated that the budget might not receive up to RUB 2 trillion (US$23.7 billion) in oil and gas taxes this year, or about 18% of the planned amount (RUB 10.9 trillion which is equivalent to US$129 billion).

The main problems for the Russian government are oil prices and the rouble exchange rate: a barrel of Urals is worth less than US$60, although the budget was set at US$70. Meanwhile, the dollar has dropped to RUB 84 – instead of RUB 96.5 according to the government's plan.

The Moscow Times noted that the government might have to devalue the rouble to plug the budget gap, which tripled the annual plan in January-February. It is currently overvalued by 20%, and gradually, by the end of the year, the exchange rate may return to RUB 100-105 to the dollar.

Background: Russia is experiencing a crisis in the freight market: one in five transport companies left the industry in January-March.

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