• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 5 days They pay YOU to TAKE Natural Gas
  • 2 days How Far Have We Really Gotten With Alternative Energy
  • 2 days What fool thought this was a good idea...
  • 5 hours A question...
  • 5 days Why does this keep coming up? (The Renewable Energy Land Rush Could Threaten Food Security)
  • 11 days The United States produced more crude oil than any nation, at any time.
Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Premium Content

Russia Set To Post A Massive $55 Billion Budget Deficit In December

  • Russia could see an enormous budget deficit of $55.2 billion in December due to its spending rising at the end of the year.
  • High energy prices have allowed Russia to post monthly budget surpluses, but December is likely to be a huge deficit.
  • To fund the invasion of Ukraine, Russia is boosting its military and security spending which will represent around 30% of its 2023 budget.

After months of budget surpluses thanks to soaring energy prices and a windfall tax on state giant Gazprom, Russia could see a huge budget deficit in December, to the tune of $55.2 billion (3.5 trillion Russian rubles), as its spending typically rises towards the end of each year, analysts say. This would be significantly more than the roughly $9 billion surplus that Russia posted between January and November.

Russia has guided for an annual budget deficit of 2% of GDP this year, and in order to meet that target, the country will have to spend much more in December than its revenues, and the deficit could reach $55.2 billion, Evgeny Suvorov, an economist at CentroCreditBank, told Reuters on Tuesday. 

But going forward, the problem with Russia’s state finances is only beginning, analysts say. 

Earlier this year, after the Russian invasion of Ukraine, Finance Minister Anton Siluanov estimated that the federal budget deficit would be 2% of GDP at the end of the current year. 

“In general, we have a budget surplus, a conditional surplus, because all spending will go towards Q4 when we have to use all resources,” Siluanov said in June, as carried by the Russian news agency TASS. 

Before the war in Ukraine, Russia had guided for an annual budget surplus of 1% of GDP.

Despite the high state revenues and the budget surpluses so far this year, Russia is boosting its military spending to fund its war in Ukraine and will be tapping the rainy-day National Welfare Fund (NWF) and taking on more debt with bonds on the domestic market as the war drains its financial resources. Domestic bonds are popular because the sanctions are essentially limiting investment opportunities for local investors. 

So far this year, Russia has posted monthly budget surpluses, according to data from the Russian Finance Ministry compiled by Bloomberg. But a large deficit is looming for December, as the spending typically accelerates in the fourth quarter, analysts say. 

Higher deficits could lead to tighter monetary policy, the Bank of Russia has warned, which means that the economy would slide into a deeper recession. 

This year and next, Russia will run a deficit of around 2% of GDP, Siluanov said last week. 

“We are now carrying out major transactions in the financial market, and at the end of the year substantial budget expenditures will be carried out, some of them from next year’s expenditures,” the minister noted. 

Borrowing on the market and tapping more money from the National Welfare Fund will be used to plug the deficit, he added. 

Russia claims its oil production and economy will not be significantly hit by the EU-G7 price cap on Russian crude oil. 

“Overall, we do not share the opinion that the introduction of a price cap is an event that will lead to major consequences for the Russian economy,” Russia’s First Deputy Energy Minister Pavel Sorokin said last week. 

To fund the invasion of Ukraine, Russia is boosting its military and security spending at the expense of financing for schools or hospitals. 

The UK Ministry of Defence has assessed that Russia’s defense spending significantly increased and will represent over 30% of Russia’s entire 2023 budget, the U.S.-based Institute for the Study of War (ISW) said this week.

“Putin is thus continuing to drain his budget into his war in Ukraine and may need to defund other international or domestic campaigns in the process,” ISW experts wrote. 


While Russia has largely managed to keep budget surpluses this year, thanks to the energy sector, fiscal pressure on the state finances is only set to increase, some analysts say. 

Oleg Vyugin, a former top official at the Finance Ministry, told Bloomberg last week, “The main problem of the Russia budget is that they want to spend far more than they can really afford.”

“The fact they have to tap the wealth fund to cover the deficit is a clear sign that problems are beginning.”

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • George Doolittle on December 14 2022 said:
    Russia massively subsidizes natural gas to keep all of their major Cities *"in the heat."*

    That's about to get really expensive already is becoming abundantly clear already also true throughout all of Europe as well all of whom are being *CONSUMED* by a massive inflation. Oddly enough Ukraine is the one place that has access to US Dollars plus possibly imminently the IAEA to start checking on the vast Ukraine nuclear fleet for possible restart/Russian exit.

    In the meantime great news for Equinor of Norway.
  • Mamdouh Salameh on December 14 2022 said:
    Such a claim is either based on wrong calculations or straight disinformation and I will explain why.

    If between January and November Russia’s budget surplus amounted to $9.0 bn, how could it suddenly get into $55.2 bn deficit in December? Since Russia was still selling an average of 7.5 million barrels a day (mbd) in December at average price of $80 a barrel compared with $90 for the period of January-November, then its loss of revenues only amounts to an estimated $75 million but this isn’t a deficit to the budget.

    Russia’s budget is based on a oil price of $40 a barrel. So even with a loss of $75 million in revenue in December, Russia’s budget is still earning $300 million a day above its budget price and not incurring $55.2 bn as claimed.

    Moreover, Russia is telling the truth when it says that neither its economy nor its oil production will be hit by the G7/EU price cap. The reason is that the global oil market has already ignored the cap considering it neither viable nor enforceable. It will end up in a waste bin.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News