russia’s Budget Deficit Has Already Exceeded Its Liquid Reserves

In the first four months of 2026, the rf’s budget deficit reached $78.4 billion – that is 2.5% of GDP and nearly double the figure for the same period last year. For comparison: moscow had projected a deficit of $50.5 billion for all of 2026. By April, the annual target had already been exceeded by a wide margin.

Oil dealt the main blow. Revenues from hydrocarbons fell by 38.3% – to $30.6 billion. All three key revenue items collapsed: the tax on additional income, the gas export duty, and the mineral extraction tax. To partially offset the shortfall, the kremlin raised the base VAT rate – and non-oil-and-gas revenues formally rose by 10.2%, to $125.6 billion. But this is not economic growth, but fiscal pressure: money is being squeezed out of businesses and the population, not earned.

Meanwhile, spending has skyrocketed to $235 billion – by 15.7% or $32 billion more than a year ago. The military, social obligations, and support for “priority” sectors of the economy are consuming an ever-larger share of the budget. A separate item – servicing the national debt: in just four months, russia spent $14.8 billion on interest. For comparison: for the entire year of 2022, this amount was $15.9 billion. Domestic borrowing is becoming increasingly expensive, while the room for maneuver is becoming increasingly narrow.

The national wealth fund is no longer a lifeline. According to some estimates, its liquid portion amounts to about $48.4 billion – less than the current deficit. The fund, which was supposed to serve as a safety bag, has effectively been depleted as a full-fledged stabilizer. Even the central bank of the rf acknowledges this: in late April, it publicly warned of budgetary risks and hinted at a possible tightening of monetary policy.

It goes from bad to worse. russia’s budget model relies on government spending and debt, while oil revenues are falling and real economic activity is slowing down. To make ends meet, moscow will most likely pursue three paths simultaneously: raising taxes, increasing domestic borrowing, and cutting certain programs. None of these resolves the problem; they merely postpone the moment when the bills become unpayable.