The Russian government is discussing the possibility of reducing federal budget expenditures due to falling revenues and a growing deficit. According to Reuters sources , expenditures could be reduced by approximately 10% across most articles, excluding defense and so-called "protected" expenditures, including social ones. The final decision will depend on the situation with oil prices.
Prime Minister Mikhail Mishustin. Photo: Dmitry Astakhov, Sputnik, Government Pool Photo via AP
According to one source, the Ministry of Finance has already informed the main administrators of budget funds about the need to cut spending, and departments are now deciding what exactly can be reduced. "Non-essential" expenditures are likely to be affected first — for example, new construction projects, road repairs, or other infrastructure works.
For January-February, Russia's federal budget was executed with a deficit of 3.5 trillion rubles (about $44.17 billion). Revenues amounted to 4.76 trillion rubles ($60.08 billion), while expenditures were 8.21 trillion ($103.62 billion). Oil and gas revenues fell by 47% and reached a minimum since the pandemic — about 400 billion rubles ($5.05 billion) in each of the two months. Total budget revenues decreased by 11%, despite an increase in VAT and taxes for small businesses.
Amid the conflict around Iran, oil prices temporarily rose: Brent reached $119 per barrel, and Russian Urals — $75. However, experts consider this growth unstable and believe that expenditures will still have to be optimized.
The budget for 2026 plans expenditures of 44.1 trillion rubles ($556.61 billion). Of this, 12.9 trillion ($162.84 billion) is allocated for "defense", and together with security expenditures — 16.84 trillion rubles ($212.57 billion), or about 38% of the entire budget.
According to analysts' estimates, actual revenues may turn out to be 3 trillion rubles ($37.87 billion) less than planned. If the average oil price is about $50 per barrel, the Russian budget may undershoot oil and gas revenues by 2 trillion rubles ($25.25 billion) and another 1 trillion ($12.62 billion) in other taxes. As a result, the deficit could grow to 6.8 trillion rubles ($85.83 billion).
Analysts note that the Russian Ministry of Finance can relatively painlessly cut about 1 trillion rubles ($12.62 billion) — precisely this amount represents expenditures that are not yet allocated to specific articles.
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