The Russian budget loses trillions: how sanctions paralyzed oil exports

Financial losses of the Russian Federation

The budget of the Russian Federation faces serious financial losses due to economic sanctions that have paralyzed oil exports. As a result of the restrictions imposed on companies 'Rosneft' and 'Lukoil', more than half of Russia's oil exports to Asia are under threat. In November and December 2023, the country's budget will miss approximately 300 billion rubles in oil and gas revenues. The average price of Russian oil exports fell to 46 dollars per barrel, while the price of Urals in western ports decreased to 36 dollars per barrel.

Forecasts and government measures

From January to October 2023, the Russian budget received 7.5 trillion rubles in oil and gas revenues. However, forecasts suggest that budget losses may amount to approximately 20% of the revenues received. As of early November, the Russian budget experienced a 21% decrease in oil and gas revenues compared to the previous year, equivalent to 2 trillion rubles. Initially, the treasury project projected 10.9 trillion rubles in oil and gas revenues, but this plan was later reduced to 8.6 trillion rubles. The Ministry of Finance forecasts a budget deficit of 5.7 trillion rubles, while the actual deficit over the past 12 months has reached 7.8 trillion rubles.

In response to financial difficulties, the Central Bank of Russia began selling physical gold from its reserves. Before the war, the National Welfare Fund accumulated 405.7 tons of gold, of which 57% or 232.6 tons were sold. The amount of gold in the fund as of November 1, 2023, was 173.1 tons. The total amount of liquid assets in the NWF has decreased by 55% — from 113.5 billion dollars to 51.6 billion dollars.

These changes indicate serious economic challenges faced by the Russian economy in light of new sanctions and declining oil export revenues.

The decrease in oil and gas revenues observed in Russia has a significant impact on the overall state of the country's economy. The loss of such significant sums may lead to a reduction in social expenditures and increased economic instability. Economic difficulties are pushing the government to take new measures, such as selling gold, which may indicate a lack of other funding sources. In the context of ongoing sanctions and global economic changes, the prospects for the Russian economy remain uncertain.