Due to falling oil prices, Russia’s budget deficit in 2025 could grow to 1.5% of GDP, Reuters reports.
Oil and gas revenues have always made up the bulk of the country’s budget, but the situation on the global market is worsening financial stability.
A decline in demand for oil, caused by trade conflicts and a slowing global economy, is putting pressure on prices, which fell by more than 11% in April.
In response, the government has lowered its oil price forecast for 2025 by 17%. It has also revised up expectations for oil and gas revenues for 2025-2027 — a 15% decline is expected. If the oil price falls to $60 per barrel, the deficit could increase by another 1 percentage point. Slowing economic growth is also a concern: in 2025, GDP is likely to grow by 1.6%, compared with 4.3% last year. Inflation is expected at 7%.
The Bank of Russia left the key rate at 21%, indicating difficulties in controlling inflation.
The ruble exchange rate, which has strengthened by 38% since the beginning of the year, may weaken to 95 rubles per dollar, which will reduce budget revenues from oil and gas exports.
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