Russia's Budget After the Oil Era

Since the beginning of 2026, reports concerning budget adequacy have been appearing with increasing frequency in the information space. To cut to the chase: in just the first four months of 2026, the federal budget deficit has grown to 5.9 trillion rubles, against a planned annual target of 3.8 trillion rubles.

Against this backdrop, interest in the topic has naturally intensified. A budget deficit is an ambiguous phenomenon, so it cannot be assessed as purely positive or negative. What matters are the specific parameters and the reasons behind its formation. The current federal budget indicators have, not without reason, raised concerns among a number of experts.

It's no secret that oil and gas revenues constitute a significant share of federal budget income. According to Finance Ministry data, from 2011 through the end of 2014, the gap between oil-and-gas and non-oil-and-gas revenues remained within 20%, with the largest deviations recorded predominantly only in individual months (Figure 1).

More substantial changes begin in 2015. Intensified sanctions pressure and a new wave of uncertainty in relations with Western countries led to a widening gap between oil-and-gas and non-oil-and-gas revenues. Around the same period, Russia began pursuing a course of import substitution and economic sovereignization. From 2018 through 2019, the geopolitical situation became less acute, despite the persistence of the conflict factor itself—this can also be clearly traced on the chart. Already in 2020, another "dive" in the share of oil and gas revenues begins, triggered by the COVID-19 pandemic. In 2021, the global economy started recovering from COVID restrictions, and energy supplies resumed. In turn, the sharp escalation of the geopolitical situation in 2022 led to a new steep decline in the share of oil and gas revenues.

Given the reasons for changes in revenue structure, we're talking not simply about a decline in the share of oil-and-gas revenues relative to non-oil-and-gas revenues, but about a sustained trend of contraction in the former, while growth in the latter does not always compensate for their sharp fluctuations. At the same time, the situation for the federal budget is partially smoothed by the U.S. dollar exchange rate, which often reaches local peaks during periods when the share of oil and gas revenues contracts—with the exception of 2022. This has a stabilizing effect on budget replenishment.

Revenue dynamics and rising budget expenditures

Revenue dynamics in absolute terms generally confirm this logic (Figure 2). It's important to note, however, that from 2011 to 2025, non-oil-and-gas revenues in comparable prices increased 1.92 times, while oil-and-gas revenues contracted 1.73 times. Thus, over the past 15 years, non-oil-and-gas revenues have, first, grown significantly, and second, their growth has outpaced the contraction in oil and gas revenues.

Since revenues don't appear to be the main source of the budget deficit problem, it's fair to assume that current budget indicators are largely tied to the expenditure side. The Finance Ministry has not published data on the structure of expenditures since 2022, making it difficult to examine current indicators in detail. However, from 2011 to 2025, budget expenditures in February 2026 prices increased 1.5 times, while total revenues grew only 1.25 times.

Causes of rising deficit and potential risks

With expenditures growing faster than revenues, the budget deficit is quite predictably increasing (Figure 3). Comparing current expenditure and deficit dynamics with data from previous years, one can assume that expenditure growth is primarily concentrated in such categories as "National Defense," "National Economy," and "Social Policy." At the same time, "Social Policy" has remained the largest expenditure item even outside crisis periods.

To sum up, the growing budget deficit can certainly be considered a negative trend in fiscal dynamics in recent years, as it has been driven by reactive spending increases in response to external challenges. The key constraint in this situation is the economy's resilience margin. Given signs of "overheating," additional tax increases could prove extremely risky in terms of potential consequences. Although the Ministry of Finance states that the main changes to the tax system have already been adopted, this does not rule out new measures by the state should geopolitical and geoeconomic conditions deteriorate.