Russia expects large budget deficit in early 2026 as energy revenues decline

Russia’s Ministry of Finance expects a significant federal budget deficit at the beginning of 2026 due to a shortfall in oil and gas revenues, Deputy Finance Minister Vladimir Kolychev said.

Kolychev said the situation is being driven by persistently low global oil prices, which are also weighing on Russia’s Urals crude, the country’s main export blend and the benchmark used for tax calculations, Caliber.Az reports per Russian media. 

“We will have a shortfall in oil and gas revenues,” he said.

The deficit is expected to be particularly visible in the first months of the year because government spending is typically front-loaded in January and February. Large advance purchases during this period result in elevated expenditures early in the year, creating what Kolychev described as an “optical” increase in the budget deficit.

At the end of 2025, the Ministry of Finance estimated the federal budget deficit at around 5.6 trillion rubles ($60 billion). Over the 12-month period, government revenues rose by 1.6 per cent, while expenditures increased by 6.8 per cent.

Analysts attribute the widening deficit primarily to increased military spending alongside a sharp decline in oil and gas revenues. To partially cover the budget gap, the government decided to raise the value-added tax (VAT). Finance Minister Anton Siluanov said alternative methods of financing the deficit would carry a higher risk of fueling inflation.

By Sabina Mammadli