Russia posted a $29 billion deficit in the first quarter

businessinsider:   Russia's spending jumped 34% in 1Q to 8.1 trillion rubles, or $99 billion, amid the Ukraine war. However, energy revenues plunged 45% to 1.6 trillion rubles due to boycotts and sanctions. As a result, Russia posted a deficit of 2.4 trillion rubles in the first quarter of 2023.

Russia's falling energy revenues may not be able to foot its military bills for long — the country's just posted an almost $30 billion deficit in the first quarter.

The Kremlin has wildly reversed a 1.13-trillion-ruble, or $14 billion, surplus in the first quarter of 2022, to post a 2.4 trillion ruble quarterly budget deficit this year as the country's expenditures exceeded its revenues.

Government income declined nearly 21% to 5.7 trillion rubles during the quarter compared to a year ago, per data released by Russia's finance ministry on Friday. In particular, Russia posted a 45% plunge in energy revenues to 1.64 trillion rubles due to a fall in prices for Russia's flagship Urals oil grade and a decline in natural gas exports.

This comes after the European Union — a major customer of Russian energy — banned Russian crude oil starting December 5. At the same time, the European Union, G7, and Australia also imposed a $60-a-barrel price cap for Russian crude. In February, the EU imposed a similar ban and price cap on imports of Russian refined fuel products.

Russia's finance ministry did not quantify the impact of the ban and price cap on Russian crude but the Centre for Research on Energy and Clean Air, a Finnish think tank, estimated in January that the ban and price cap was costing the Kremlin over $170 million a day.

In sharp contrast, Russia's expenditure has seen a massive jump — the country's spending jumped 34% to 8.1 trillion rubles over the same first quarter period, per the finance ministry data.

The Russian finance ministry did not explain why expenditures spiked so sharply, but the country's defense spending went over budget by 54% in 2022, according to Gaidar Institute, an independent Moscow-based think tank, Reuters reported on April 4.

The country is likely to continue plowing money into defense and security, with combined spending expected to hit 9.4 trillion rubles in 2023, according to a Reuters budget analysis in November. That's nearly one-third of the national budget.

The Kremlin plans to post a deficit of no more than 2% of its GDP in 2023, Finance Minister Anton Siluanov told the state-owned Rossiya 24 news channel on February 17, per Reuters. However, analysts told the news agency the deficit will likely exceed 2%, with one estimate coming in in the 4% to 5% range.