Large-Scale Crisis of the rf’s Economy: Cutting Programs and Confiscation of Property to Fill the Budget

The federal budget of the rf in the first half of this year shows a deficit of $47.26 billion, which is 1.7 % of GDP – more than six times more than last year ($6.7 billion). In June alone, the deficit increased by another $3.8 billion.

The reason for this is Western sanctions, which hit export revenues. Oil and gas revenues declined by 16.9 % (to $60.6 billion), while non-oil and gas revenues could not compensate for the losses. At this, expenditures increased by 20 % to $272.2 billion.

According to the Foreign Intelligence Service of Ukraine, the rf’s government is already preparing to revise the budget in the autumn. It is expected to cut programs, increase borrowing and use reserves. Additionally, there is a risk of ruble devaluation. In order to supplement the budget, the ministry of finance of the rf plans to introduce out-of-court collection of tax debts from the population – through bank accounts and property – starting in November.

Against the background of the reorientation of the budget  to the military-industrial complex, minister of industry and trade Alikhanov has admitted that the government is unable to support the troubled civilian sectors. Transport engineering, metallurgy, construction, and woodworking are under a blow. It is estimated that the long-term economic losses from the sanctions could reach 7–14 % of GDP ($350 billion).