Russia's budget deficit may triple amid plunge in oil revenues – Reuters

Russia's state budget deficit could nearly triple by the end of 2026, exceeding official forecasts, due to reduced oil purchases by India, higher discounts on raw materials and rising war-related spending.

Source: Reuters, citing internal calculations from a government-linked Russian economic research centre

Details: Forecasts indicate that Russia's energy revenues in 2026 could be 18% lower than planned. This would push the deficit to 3.5-4.4% of GDP, compared with the government's target of 1.6%.

Overall budget revenues are expected to fall by 6% to RUB 37.9 trillion (about US$494.78 billion), while expenditures could exceed planned levels by 4.1-8.4%.

Key factors affecting the Russian economy include sanctions, high interest rates and labour shortages. The strengthening of the rouble last year also hit revenues, since oil taxes are calculated in dollars but paid in roubles.

Currently, the Russian government holds RUB 4.1 trillion (about US$53.82 billion) in fiscal reserves. However, analysts at Alfa Investment and VTB Bank warn that these reserves could be depleted within a year at the current pace of falling revenues.

A source close to the Russian government told Reuters that Kremlin plans to cut military spending are "unrealistic".

Background:

• Earlier, Reuters reported, citing Russia's Finance Ministry, that oil and gas revenues fell in January 2026 to their lowest level since July 2020, totalling RUB 393.3 billion (US$5.1 billion).
• Russian oil producers continue to increase discounts on crude for India to sell cargoes that refineries began rejecting after sanctions introduced by the administration of US President Donald Trump. Some cargoes' prices have fallen to US$22-25 a barrel.

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