Page 75 - RusRPTFeb24

Russian oil and gas budgetary revenues dropped 24% year on year to RUB8.82 trillion ($99bn) in 2023, finance ministry data released on January 11 showed, as a result of weaker oil and gas prices and reduced gas flow to Europe. However, earnings were only slightly down from the pre-war level in 2021 of around RUB9 trillion, as the impact of higher natural gas prices over the last two years still offsets the effect of significantly less Russian gas flowing to Europe. Pipeline gas shipments from Russia to European markets have dropped by around 80-85% since the conflict began in Ukraine. Regarding oil and oil products, Western embargoes imposed in late 2022 and early 2023 have largely failed to make a dent in Russian revenues, as the country’s exporters have successfully managed to divert volumes to Asian markets. It is estimated by the government that Europe’s share of Russian crude exports has shrunk to only around 4-5%, from 40-45% previously. Looking ahead, the government projects that revenues will rebound to RUB11.5 trillion this year as a result of ongoing efforts to expand the country’s market share in Asia.
Russia’s budget deficit widened more than expected last year, as oil and gas revenues fell by almost a quarter and the Kremlin increased spending amid its war in Ukraine.
The fiscal gap reached RUB3.2 trillion ($36.1bn), or 1.9% of gross domestic product, Finance Ministry data shows. That’s RUB300bn higher than both the budget target and the late-December estimate of Finance Minister Anton Siluanov.
Predictions for the budget varied widely over the year. At the start of 2023 Ministry of Finance (MinFin) predicted a 2% of GDP budget of RUB2.9 trillion. However, after revenues collapsed following the twin EU oil embargos in December and February analysts predict a deficit of at least 3-4% or more.
MinFin stuck to its estimate of 2% saying oil revenues would recover in the second half of the year. And they recovered so strongly that MinFin improved its forecast for the deficit to 1% of GDP in the last quarter.
The poor performance of the oil sector in the final months, and the heavy spending that always happens in December – the government usually makes
75 RUSSIA Country Report February 2024 www.intellinews.com