Rating agency: Russian government deficit will increase significantly in 2023
According to rating agency Scope, lower revenues from oil and gas exports will widen the hole in Russia’s state budget this year. The deficit is likely to rise to 3.5 percent of gross domestic product (GDP), according to an analysis by the European credit rating agencies available to the Reuters news agency on Friday.
In 2022, the shortfall was a good two percent. “The sanctions and the war limit Russia’s fiscal flexibility,” Scope emphasized. “This is due to lower export earnings, higher war-related spending and a steady decline in economic output.”
However, the state should be able to plug the hole in the state budget without any major problems. “For the time being, Russia can finance its deficit relatively easily using the National Property Fund,” the rating agency stressed.
However, this is likely to melt: by the end of 2024, the fund will probably only correspond to 3.7 percent of GDP, after it was 10.4 percent at the end of 2021 – i.e. shortly before the outbreak of the war against Ukraine. Another way to plug the budget hole is to issue domestic bonds to state-owned banks.