Deputy Prime Minister Alexander Nowak stated in an interview for the Vedomosti daily that the Russian government faces a task balancing the budget in the face of falling revenues.
According to him, the authorities will have to choose priorities among spending items because oil prices have turned out to be low, the ruble exchange rate is strong, and the need for spending has increased, including to ensure defense and security. — The main task here is to determine spending prioritiesputting emphasis on the most effective directions – said Nowak.
As he emphasized, changing the budget structure has become a challenge for the economy.
According to calculations by the Gaidar Institute, the share of expenditure on law enforcement structures in the budget reached 40 percent. compared to 24 percent before the war. However, the share of social spending decreased from 38%. to 25 percent, which is the lowest level in the last 15 years.
Nowak's comments may indicate that the authorities are preparing for budget consolidation, Raiffeisenbank analysts write. In the period January-April the federal budget deficit has already reached 5.8 trillion rubles (at the current exchange rate PLN 282 billion) and exceeded the plan for the entire year by 1.5 times. At the same time, Nowak announced a sharp reduction in the economic growth forecast – from 1.3 percent. to 0.4 percent, as bank analysts point out. And this may mean a shortage of income from sectors other than raw materials.
Billions of losses
The budget deficit this year, even with the increase in oil prices, may turn out to be significant higher than plannedunless fiscal policy becomes more conservative, writes Raiffeisenbank. For now, spending remains “significantly higher” than previous years' levels.
In the budget law for this year, the government assumed an increase in revenues by 3.2 trillion rubles (PLN 157 billion), counting on filling the state treasury thanks to an increase in VAT and taxes on small businesses. However, the result turned out to be the opposite of what was expected.
Instead of growth, revenues from entrepreneurs decreased by 22%.and general budget revenues decreased by 4.5%. in the period January–April. According to the estimates of the Gaidar Institute, due to the economic slowdown, the state treasury may lose 500 billion rubles (PLN 24 billion) in VAT and 100 billion to 200 billion rubles (PLN 4 billion to PLN 9 billion) in income tax compared to the plan.
Even taking into account geopolitics, the government will most likely have to decide to significantly reduce non-interest budget expenditure this year, notes economist Kirill Rodionov.
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The crisis is getting worse
The current size of the deficit has already increased by over 60%. exceeds the balance of liquid funds in the National Welfare Fund of the Russian Federation (3.63 trillion rubles, i.e. approximately PLN 178 billion). — Facing a shortfall in oil and gas revenues, an economic slowdown and rising debt servicing expenses there is no other serious way to balance the budget – emphasizes the expert.
The crisis in Russia is already visible on many levels. Russian employers have become more active in laying off workers in response to the deteriorating economic situation.
According to the Get Experts review, in 2025, every fourth company reduced jobs, while in 2023 only 10 percent declared such a step. employers.
Businesses that previously added employment through import substitution, digitalization and new projects are now shifting into survival mode: cutting expenses, putting plans on hold and trying to get rid of workers they previously hired for future growth.
Currently, employment optimization has become a permanent trend in the labor market as employers try to limit expenses in the face of economic slowdown, declining turnover and rising costs, as experts note. — Large enterprises no longer pretend that they can keep their teams unchanged indefinitely, ignoring strategy, efficiency and changes in the external environment, explains Marina Tarnopolskaya, managing partner at the Russian consulting company Kontakt InterSearch.
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