The kremlin Will Have to “Let Go” of the Exchange-Value of Ruble and Increase the Policy Rate

The rf’s budget expenditures in early April 2025 increased by 83 % compared to April 2024 and reached $155.95 billion. This is the highest level since the beginning of the year. At this, the expenditure rate has accelerated – since the beginning of the month, almost USD 22.62 billion has been spent, or USD 2.77 billion per day. At this rate, the annual expenditures of the russian budget could reach $580.95 billion against the $493.21 billion budgeted for 2025.

Expenditures are increasing against the background of the $2.38 billion increase in public debt service costs. The situation is also negatively affected by the decline in world oil prices in early April. At the current oil prices, the russian budget will lose 20.24 billion to 23.81 billion US dollars in oil and gas revenues. At the same time, the increase in the value of the russian ruble (to 84 rubles for 1 dollar) leads to a decrease in nominal revenues in russian currency.

The rapid growth of budget expenditures indicates an increase in spending on defense and imports of sanctioned goods, given the risks of secondary sanctions. According to the Foreign Intelligence Service of Ukraine’s analysis, maintaining this rate will encourage the kremlin to “let go” of the ruble to at least 100 rubles for 1 dollar and increase the policy rate for the sale of government bonds.