Budget Outlook for Russia: Three-Year Projections and Policy Impacts

In Russia, the budget cycle spans three years, with spending and income mapped out three years ahead. The government projects the highest revenue for 2024.

Forecasted Revenues:

• 2024 – 35 trillion rubles
• 2025 – 33.5 trillion rubles
• 2026 – 34 trillion rubles

Next year is set to see the largest outlays.

Forecasted Costs:

• 2024 – 36.7 trillion rubles
• 2025 – 34.4 trillion rubles
• 2026 – 35.6 trillion rubles

As a result, the budget is expected to run a deficit over the three-year horizon. This indicates that projected revenues will not fully cover the planned expenditures. This pattern is not unusual for Russia; over the past decade treasury receipts exceeded costs only three times.

Estimated Budget Deficit:

• 2024 – 0.9% of GDP
• 2025 – 0.4% of GDP
• 2026 – 0.8% of GDP

Over the next three years, the deficit is anticipated to stay under 1% of GDP. The GDP for the Russian Federation is projected at 179.956 trillion rubles in 2024, 190.637 trillion in 2025, and 202.304 trillion in 2026. Inflation is expected to run around 4.5% in 2024 and about 4% in 2025–2026.

Income

Oil and gas revenues will contribute a substantial portion of the budget. These receipts arise from export duties and taxes on energy sector companies, projected to amount to 11.5043 trillion rubles next year (6.4% of GDP). Forecasts for 2025 and 2026 put these revenues at 11.7598 trillion rubles (6.2% of GDP) and 11.4147 trillion rubles (5.6% of GDP), respectively.

Budget Rule. How are oil and gas revenues calculated?

President Vladimir Putin signed a law establishing that oil and gas revenues are computed using an oil base price of 60 dollars per barrel when formulating the budget. This rule redirects additional revenues above the base price to the National Welfare Fund, and any shortfalls below the base price are compensated from the fund.

This year, the mechanism operated differently. Authorities counted 8 trillion rubles as the nominal oil and gas revenue for the year, using the same $60 per barrel base. The Finance Ministry proposed resuming the previous method on September 22 of the year, and on October 25 the Federation Council approved amendments to the Budget Law setting the base price at $60 per barrel.

Forecasts show additional oil and gas revenue from abroad totaling 1.8211 trillion rubles in 2024, 1.8357 trillion rubles in 2025, and 1.8448 trillion rubles in 2026 when prices exceed the budgeted level (the $60 base). In addition to global oil price dynamics, the change in the established marginal discount for Urals oil relative to Brent is expected to affect revenues, along with the completion of a tax maneuver that lowers the export tax on oil to zero from 2019 through 2024, while gradually increasing the mining tax.

Historically, oil and gas have dominated the budget. Today, it is assumed that other revenues—including taxes, excise duties on fuels, penalties, and similar items—will be twice as large as oil and gas receipts. They are projected to exceed 23 trillion rubles in 2024, rising to over 21 trillion in 2025 and surpassing 22 trillion in 2026. The share of non-oil and gas revenues in GDP is expected to be 13.1% in 2024, 11.4% in 2025, and 11.2% in 2026.

Why will non-oil and gas revenues outpace oil and gas revenues?

A scholar at the Russian University of Economics explained that, over the three-year horizon, non-oil and gas receipts should rise due to higher turnover taxes and income taxes. The dialogue included discussions about VAT changes and excise taxes impacting overall budget indicators. For example, there are ongoing debates about increasing VAT on certain foods to 20% and introducing a broader excise on sweetened beverages, which could contribute to the budget. A draft law on excess profit taxes is also under consideration, which could add hundreds of billions of rubles to the fisc.

To balance the federal budget in 2024, 1.3 trillion rubles will come from the National Welfare Fund. Beyond the Welfare Fund, the primary sources of financing the deficit in 2024–2026 will include state debt.

Expenses

Finance Minister Anton Siluanov has stated that national defense will be the priority in the three-year period. He noted that defense spending has not previously dominated the budget in this way, but it is now a central task. Still, he ensured that the upcoming year is not primarily a military year.

Defense expenditures are planned at 6% of GDP for 2024 or 10.736 trillion rubles, 8.520 trillion rubles (4.5% of GDP) in 2025, and 7.419 trillion rubles (3.7% of GDP) in 2026. This trajectory is much higher than the country’s 2024 and 2026 costs and more than twice the 2025 level.

Other essential outlays include support to the national economy, with planned allocations of 3.934 trillion rubles (2.2% of GDP) in 2024, 3.257 trillion rubles (1.7% of GDP) in 2025, and 3.676 trillion rubles (1.8% of GDP) in 2026.

Budget amendments in the second reading emphasize social policy goals. Social expenditures are projected to rise by around 11% across the three years, translating to more than 7.7 trillion rubles in 2024 and most of the following years. Specifically, maternity capital payments will support 1.3 million families next year, hot meals for seven million schoolchildren are planned, and teaching bonuses will be extended to hundreds of thousands of teachers. Pensions and the minimum wage are expected to rise as part of these policies.

Overall, social programs will account for roughly one-third of the treasury’s outlays, a share similar to military and security spending. Health care will receive substantial support, with a three-year total around 7.23 trillion rubles allocated to health improvements and related services. In addition, funding for cardiovascular drug procurement, health improvements for children, and rural development will see increased allocations, with subsidies for agricultural machinery manufacturers rising in step with the plan.

Regional support remains a feature of the plan, with a handful of transfers to poorer areas designed to stabilize budgets at the regional level and maintain social safety nets for vulnerable populations.

Budget Outlook

Analysts observe that budget parameters influence social policy, defense capabilities, and the execution of major national projects. They also note a potential impact on the ruble’s exchange rate if revenue indicators falter. Some experts warn that the new budget could encounter risks tied to a high-interest-rate environment and inflation expectations, and they emphasize the importance of monitoring economic growth. However, there is a prevailing view that the overall three-year budget should be able to meet its stated aims, supported by external factors and pragmatic fiscal management.

Some analysts point to external challenges such as shifts in oil prices or sanctions, but since the start of the century, the economy has faced crises and emerged stronger, suggesting resilience in the plan for the coming years. External conditions will continue to test the budget, but policy makers appear confident in achieving the projected financing while maintaining social commitments and defense readiness. These conclusions reflect the assessments of financial researchers and economists familiar with the Russian fiscal framework and its evolving rules.