MOSCOW (Reuters) – Russia’s budget deficit narrowed to 1% of gross domestic product (GDP), or 2.17 trillion roubles ($25.5 billion), in the first quarter of 2025, compared to 1.3% of GDP in the first two months, the finance ministry said on Tuesday.
The ratio remains substantially higher than in the first quarter of last year, when it stood at 0.1%. The ministry reported that state spending was up by 24.5% while oil and gas revenues were down almost 10%.
“It (increased spending) is due to the accelerated financing of expenditures in January of this year and will not affect the target parameters of the structural balance for 2025 overall,” the ministry said in a statement.
Russia is targeting a fiscal deficit of 0.5% of GDP, or 1.17 trillion roubles ($13.7 billion). Russia’s 2024 fiscal shortfall was around $34 billion, or 1.7% of GDP.
Increased spending to finance the military operation in Ukraine has kept the budget deficit close to 2% of GDP over the last three years.
High spending has spurred inflation, with the central bank citing fiscal stimulus as one of the factors that force it to keep interest rates high.
While keeping the key interest rate on hold at 21% last month, central bank governor Elvira Nabiullina stressed the importance of the government adhering to its plans for the deficit.
($1 = 85.3000 roubles)
(Reporting by Darya Korsunskaya; writing by Gleb Bryanski; Editing by Kevin Liffey)
