Oil revenues and tax payments shrink Russia’s budget gap in October

(Reuters) – Russia’s budget deficit shrank further in October thanks to higher oil prices, a weak rouble and an inflow of quarterly tax payments, the finance ministry said on Tuesday.

The deficit for the first 10 months of the year stood at 1.24 trillion roubles ($13.45 billion), or 0.7% of gross domestic product (GDP), compared with 1.70 trillion roubles or 1% of GDP a month earlier.

Oil and gas revenues were up 27.5% in October compared to the same month of last year, although for the first 10 months of the year they were 26.3% down on the same period of 2022.

President Vladimir Putin has repeatedly boasted of the resilience of Russia’s economy in the face of Western sanctions including a cap on the price of Russian oil.

But a sharp increase in spending related to the war in Ukraine has forced the government to squeeze other areas of the budget such as healthcare and education. Defence spending will account for almost a third of total budget expenditure in 2024, according to draft plans published in September.

The current budget law for 2023 provides for a deficit of 2.93 trillion roubles, or 2% of GDP.

The gap is being financed by domestic borrowing and funds from the rainy-day National Welfare Fund (NWF), from which 559 billion roubles have been spent since the beginning of the year.

(Reporting by Darya Korsunskaya, writing by Mark Trevelyan; Editing by Gareth Jones)