Russia's budget deficit hits $61 billion, already surpassing annual target by 30%
Editor's note: This item has been updated with additional information.
Russia's federal budget deficit rose sharply to 4.9 trillion rubles ($61.4 billion) by the end of July, the Russian Finance Ministry reported on Aug. 7.
The government had originally planned for a 3.8 trillion ruble ($47.6 billion) deficit in 2025. The July figure already exceeds the government's full-year target by more than 30%.
The deficit comes as the Kremlin raised defense spending to its highest level since the Cold War and as many Russian officials warn about the possibility of recession.
The deficit jumped by 1.2 trillion rubles ($15 billion) last month alone, "mainly due to a decline in the average price of oil," the ministry said.
In just seven months, it has already spent 25.2 trillion rubles ($316 billion) of the 42.3 trillion rubles ($530 billion) annual budget, with a typical end-of-year spike in spending still ahead.
July revenues totaled 2.7 trillion rubles ($33.8 billion), while expenditures soared to 3.9 trillion rubles ($48.9 billion), up significantly from 3.2 trillion rubles ($40.1 billion) in June.
While the Russian Finance Ministry claimed spending is "on schedule," the overall budget performance paints a bleaker picture. Revenues grew just 2.8% year-on-year in nominal terms, while expenditures jumped 20.8%. In real terms, adjusted for inflation, revenues declined.
Oil and gas revenues, still responsible for roughly one-third of federal income, fell 18.5% over the first seven months of 2025 compared to the same period last year. The decline accelerated from the 16.9% year-on-year drop reported for the first half of the year.
The Finance Ministry cited weak oil prices and a strong ruble as the primary causes. Brent crude prices fell to $66.40 per barrel as of Aug. 8, marking the largest weekly drop since June.
In June, Russian opposition politician and former government adviser Vladimir Milov said the Kremlin is depleting its reserves to cover a rising budget deficit and fund the war.
"Even the amended version of this year's federal budget assumed a large deficit at $70 per barrel," Milov told the Kyiv Independent. "Investments are not coming to Russia; everything is developing only at the expense of budget funds, and budget funds are being reduced."
Amid soaring military expenditures and high inflation, the Kremlin is reportedly planning to impose price caps on essential food products such as vegetables, dairy, and poultry, according to the pro-government Russian outlet Kommersant.
Commenting on Aug. 8, Milov attributed the price increases primarily to sanctions, economic isolation, and the disruption of trade networks.
"The rise in wholesale prices is driven by internal factors: inflation, costly trade, expensive logistics with Asia, and more," he said. "But the root causes of price growth lie on a completely different level — sanctions, isolation, and the breakdown of trade chains."
U.S. President Donald Trump tied Russia's economic decline to his push for peace, saying that falling oil revenues may force Russian President Vladimir Putin to end the war in Ukraine.
