6 February 2026
Russia’s federal budget in January was closed with a deficit of 1.718 trillion rubles, which is almost half of the year’s plan, according to data published by the Ministry of Finance on Friday.
During the month, the treasury received 2.362 trillion rubles in revenue—11.6% less than a year earlier. Oil and gas revenues plummeted by 50%, reaching a five-year low of 393 billion rubles.
Non-resource tax collections increased by 4.5% to 1.969 trillion rubles. VAT revenues jumped by almost a quarter, to 1.13 trillion rubles, following its increase to 22%. However, this increase proved ineffective in compensating for the collapse in resource revenues, even though the Ministry of Finance began slowly cutting expenditures—by 1.4%, to 4.08 trillion rubles.
As a result, the “hole” in the treasury now exceeds the January 2025 deficit by 17%. Since the start of the war, the Russian budget has accumulated a deficit of 17.4 trillion rubles, according to data from the Ministry of Finance.
“The high deficit figures at the beginning of the year are primarily due to the advanced financing of expenditures,” the Finance Ministry explains. This year, it plans to reduce the budget “gap” from 5.7 trillion rubles last year to 3.8 trillion.
However, a source close to the government told Reuters that the collapse of Russian oil prices to $40 and problems with oil exports to India could lead to the deficit exceeding the plan by 2-2.5 times. According to the source, closed calculations showed that the budget gap could reach a record 10 trillion rubles, or 4.4% of GDP, since oil and gas revenues will be significantly lower than planned, and military spending will have to be increased.
Due to budget problems, the Finance Ministry has proposed freezing funding for all state projects from the National Welfare Fund (NWF) and may also cut civilian spending, the source added.
Budget risks have undoubtedly increased, notes economist Dmitry Polevoy: “In a negative scenario, the authorities will likely be forced to seek new sources of revenue, and the first in line could be the non-oil and gas raw materials sectors, the non-resource sector of the economy, and even household incomes.”
Regardless, budget problems are unlikely to force Vladimir Putin to cease hostilities anytime soon, according to economist Vladislav Inozemtsev: “Putin will push the Central Bank to print money, he will continue to raise taxes, he will sell state property, and nationalize corporate businesses.”
“This will allow [Putin] to obtain enough money to wage war in 2026 and, most likely, in 2027,” Inozemtsev told The Guardian.
The main intrigue for the budget is whether Russia will adapt to the new sanctions restrictions, which have significantly increased oil discounts, notes investment banker Evgeny Kogan. If not, he continues, “difficult decisions” will have to be made as early as the second half of this year: cutting spending, raising taxes, and increasing borrowing—all at the same time.
Good move (sarcasm). The odor of desperation is getting pretty stinky in mafia land. Printing more money, or increasing the money supply without a corresponding rise in economic production, typically causes inflation, reduces purchasing power, and can lead to hyperinflation, making currency worthless.