- Russia saw an almost 50% drop in oil and gas revenues in January, contributing to a larger budget deficit.
- Moscow’s spending jumped nearly 60% as Russian President Vladimir Putin’s war on Ukraine approached the one-year mark.
- Russia sold foreign currency reserves to help fill the budget gap.
A drop in Russian oil and gas revenues has come up against the Kremlin’s increased spending on its nearly year-long war with Ukraine, leading to a wider budget deficit for the country in January.
Oil and gas revenues fell 46% in January from the same month a year ago to 426 billion rubles ($5.96 billion), the Russian Finance Ministry said in a statement on Monday. preliminary. It attributed the drop largely to lower prices for its Urals blend – its biggest crude oil export – and lower natural gas exports.
Russia sold the Urals at an average price of $49.48 a barrel in January, below the total of $70 a barrel forecast in the Russian budget, according to the Financial Times. Oil and gas revenues are a key source of financing Moscow’s spending, but the country has come up against sanctions imposed by Western countries after Russia invaded Ukraine.
Government spending in January, meanwhile, jumped 58.7% from a year earlier to 3.12 trillion rubles. Spending rose amid widely classified Russian plans to boost defense spending to 3.5 trillion rubles in 2023, the FT reported.
Lower energy sales and higher spending helped the federal budget run a deficit of 1.76 trillion rubles ($24.78 billion) last month.
Russia sold energy to countries including China and India to boost its funds. Russia has also increased sales of its foreign exchange reserves to deal with the budget deficit resulting from the war it started in February 2022.
Last week, the Ministry of Finance announced that it would sell more than $2 billion worth of foreign currency from February 7 to March 6, almost triple the 54.5 billion rubles of foreign exchange reserves sold last month. .
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