The Russian economy is continuing to tank as it hemorrhages money trying to maintain Vladimir Putin’s war effort against Ukraine.
In 2024, the country’s deficit was in excess of three trillion rubles (£25 billion) for the third successive year, the finance ministry confirmed.
Despite revenues increasing by 26% to 36.7 trillion rubles (£297 billion), this was not enough to offset the staggering spending costs, which soared 24% to 40.2 trillion rubles (£326 billion).
This put the total federal budget deficit at 3.5 trillion rubles (£29 billion), or 1.7% of Russia’s GDP.
Despite being Russia’s second highest deficit in 2020, it’s still an improvement from 1.9% of GDP in 2023, though far behind the goal of 0.9% of GDP.
The finance ministry noted a spike in spending at the end of last year in order to partially pay off advances on 2025 expenses, which were funded by oil and gas revenues – its most valuable exports.
Taking the vital oil and gas reserves out of the equation, Russia’s deficit actually increased from 7% of GDP in 2023 to 7.3% in 2024.
Despite these shocking numbers, Russian debt is still much better than the European Union’s 81.5% of its members’ GDP.
In 2025, Russia will likely spend 13.5 trillion rubles (£111 billion) on its military, nearly a third more than last year. Defence spending is expected to stay at the same rate until 2027, when it’ll account for at least 40% of the national budget.
This comes just days after the announcement that thousands of Russian workers in the energy and banking sectors could lose their job as firms struggle to pay back loans.
As interest rates smashed a record high of 21% and projections putting it at 22% by the end of March, some Russian firms are left contemplating bankruptcy.
Enegery giat Gazprom could lay off almost 40% of staff at its Saint Petersburg headquarters, as revealed in a letter from deputy chairwoman Yelena Ilyukhina to CEO Alexei Miller. This would leave 1,600 people without jobs.
This unfolds as Russian energy and banking sectors have become increasingly isolated in the face of stringent economic sanctions from the West in an attempt to hinder its war economy.
