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 Russia’s finance ministry has updated its 2024 budget deficit projection to 2.12 trillion roubles ($23.76 billion), equating to 1.1% of GDP. This adjustment, part of budget amendments submitted to the State Duma, represents an increase from the previous estimate of 1.595 trillion roubles or 0.9% of GDP.

Increased Defense Spending

This revision is primarily driven by heightened defense and security expenditures due to the ongoing conflict in Ukraine, which began in February 2022. Over the past two years, these increased costs have led to annual deficits exceeding 3 trillion roubles, about 2% of GDP. To address this, the government has relied on internal borrowings and the National Welfare Fund.

Proposed Tax Reforms

To enhance budget revenues and address the deficit, the government has proposed tax increases targeting corporations and wealthy individuals. These reforms could potentially add an extra $30 billion to the 2024 budget.

Current Economic Indicators

According to the finance ministry, the budget deficit for the first four months of 2024 was 1.48 trillion roubles, or 0.8% of GDP, indicating ongoing fiscal challenges.

Market Reactions and Economic Outlook

Market analysts suggest that the revised deficit projection may affect investor confidence and the broader economic outlook. The combination of increased defense spending and proposed tax hikes reflects the fiscal pressures facing Russia amid international sanctions and geopolitical tensions.

“Raising the deficit estimate highlights the fiscal impact of ongoing defense expenditures and sanctions,” commented Alexei Kudrin, a Russian economist. “While the proposed tax hikes are necessary, they need careful implementation to avoid dampening economic activity.”


Russia’s updated budget deficit estimate underscores the fiscal challenges ahead. With proposed tax reforms and continued defense spending, the coming months will be crucial for the country’s financial stability and economic direction.

Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

4th June, 2024

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