Kremlin Financial Situation Stable, Low Debt, Growing Economy
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The Kremlin is planning to raise military expenditure by 25% to $140 billion a year, according to budget plans submitted to parliament, reported Russian independent news outlet The Bell. spending is set to remain at this post-Soviet record high for at least three years. At the same time, the government intends to run a budget deficit of no more than 1% of GDP and is not counting on any windfall income from oil revenue.
The government expects oil and gas revenues, which were the main fuel for Russia’s military machine in 2022, to decrease over the coming years. In 2025, they expect to raise 10.94 trillion rubles ($115 billion at current rates), 370 billion rubles down on the plans for this year. And by 2027, Moscow expects energy revenues to have dropped further, to 9.77 trillion rubles. A fall in global oil prices, reduced production and a lower tax burden are among the reasons cited for the decline by the finance ministry.
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Despite lower oil and gas income, the government expects an overall increase in its tax take — mostly powered by sales and corporate taxes.
Moscow still plans to run a budget deficit over the coming years, albeit not a large one: 0.5% of GDP in 2025, or 1.17 trillion rubles, then 0.9% and 1.1% of GDP in the following two years.
The finance ministry still has the opportunity to use the National Welfare Fund to cover the deficit, if it needed to.
The Russian government on Monday sent its 2025-2027 budget to the State Duma, outlining plans that will see defense spending hit a post-Soviet record at 6.3% of GDP.
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