Russia Taps Financial Reserves to Balance Budget Amid Oil Price Slump

The Russian government plans to utilize 447 billion roubles from its fiscal reserves to balance the 2025 budget. This decision arises after revising the deficit estimate to 1.7% of GDP due to a decrease in energy revenues linked to sustained low oil prices. Consequently, the government shelved plans to replenish the National Wealth Fund.

The Russian government plans to tap into its fiscal reserves, amounting to 447 billion roubles, to balance the budget in 2025. This step comes after a tripling of the budget deficit, attributed to lower energy revenue projections amid prolonged low oil prices.

Initially intending to replenish the National Wealth Fund (NWF), the finance ministry had to shift its approach due to financial constraints. The fund's liquid assets have seen a significant drop since the onset of the Ukraine conflict. While measures like increasing taxes or borrowing more are not being considered, economists predict they may become necessary in the future.

Finance Minister Anton Siluanov has opposed altering the current oil price cut-off strategy, which affects reserve accumulation. Russia remains a leading oil exporter, but international sanctions and internal economic factors add to fiscal challenges. Despite these hurdles, no emergency fiscal measures are planned, and only a possible future monetary policy easing could further impact the economy.

(With inputs from agencies.)