Russia’s budget deficit in January 2023 grew to 1.76 trillion rubles ($24.8 billion) — Ministry of Finance said Monday, when Western sanctions cut oil and gas revenues and the country increased wartime spending.

These figures mark the largest budget deficit in Russia for the first month since 1998. respectively Bloomberg.

Revenues fell by 35% to 1.356 trillion rubles ($19 billion), while expenses rose by 59% to 3.117 trillion rubles ($44 billion) compared to January 2022.

Oil and gas revenues fell by 46% to 426 billion rubles ($6 billion), and non-oil and gas revenues by 28% to 931 billion rubles ($13 billion).

The finance ministry blamed the drop in energy revenues on falling gas exports and the “decreasing representativeness” of Western monthly price estimates, which forced Russia to sell oil at a deep discount.

Non-oil and gas revenues fell due to changes in value-added tax rules and VAT refunds, according to the ministry’s preliminary budget estimate.

Western price caps and embargoes have limited Russia’s oil and gas revenues, with Russia’s Urals crude below $50 a barrel in January 2023, down 42% from January 2022.

To counter the impact of sanctions on budget revenues, President Vladimir Putin has set the government until March 1 to develop a new plan for calculating the price of Russian oil.

The budget deficit in January 2023 occurred after Russia published the second largest gap in recent history in 2022.

Russia predictions the budget deficit will reach 3 trillion rubles ($43 billion) in 2023, with at least a third of government spending expected to go to defense and security.

Bloomberg Economics economist Alexander Isakov said Russia’s budget deficit in 2023 may more than double to 6.9 trillion rubles ($97 billion).

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