2 February 2026
The Russian government is urgently seeking additional revenue for the federal budget, which continues to suffer from a collapse in oil and gas revenues.
According to Bloomberg, citing sources familiar with the situation, cabinet officials are seeking 1.2 trillion rubles in new funds to reduce the treasury deficit. According to the agency’s sources, the Kremlin is not counting on success in peace talks with Ukraine, and the authorities believe that military spending this year could exceed the initial plans (12.9 trillion rubles).
Meanwhile, oil and gas revenues, which account for every fourth ruble in the budget, could be significantly lower than expected due to falling oil sales and an unexpectedly strong ruble, Bloomberg sources say.
In January, the price of Urals crude fell to $35 per barrel (compared to $59 in the budget), and the dollar exchange rate is holding below 80 rubles, down from the 92.2 rubles projected by the Finance Ministry. As a result, the budget could lose every fourth ruble of oil and gas revenue—a total of 2.2 trillion rubles, according to Bloomberg calculations.
New taxes could bring in the new money. Although only a month has passed since the VAT increase, the Ministry of Finance has already proposed legalizing casinos and taking 30% of their revenue, introducing export duties on diamonds, and the Ministry of Natural Resources has announced a radical increase in environmental fees—9-20 times for metallurgists, 15-25 times for gold miners, and 5 times for the oil and gas sector.
The Ministry of Finance has projected a 3.2 trillion ruble revenue increase in the 2026 budget, 1.2 trillion of which should come from the new VAT, and another 200 billion from the tax reform for small businesses, which will deprive hundreds of thousands of entrepreneurs of the simplified tax system. Furthermore, a technology tax on equipment and electronics will be introduced on September 1, from which the government expects to generate another 200 billion rubles over three years. According to the Ministry of Finance’s calculations, this should reduce the budget deficit to 1.6% of GDP, which last year reached a post-pandemic record of 2.6% of GDP, or 5.7 trillion rubles.
However, as a result of falling revenues, the treasury “gap” in 2026 could reach last year’s level—2.5-2.7% of GDP, estimates Dmitry Polevoy, Investment Director at Astra Asset Management. This means the government and the Ministry of Finance will have to increase the loan program from 5.5 trillion rubles to 6.5-6.7 trillion rubles, as well as open up the National Welfare Fund and withdraw 1.1-1.4 trillion rubles from it.
The Russian economy is entering the new year squeezed on three sides, notes Sergei Aleksashenko, former deputy chairman of the Central Bank and senior research fellow at the NEST Centre in London. Military conflict continues to drain financial, material, and human resources; high interest rates and cuts in civilian budget spending are putting pressure on businesses and aggregate demand; and sanctions-related restrictions on access to technology and equipment are leading to the obsolescence of production capacity, Aleksashenko notes.
“It’s very difficult to imagine the economy growing in such a situation,” he notes.
“New taxes could bring in the new money.”
This means the downward spiral continues and gaining speed. If taxes were spent on useful things, it wouldn’t be quite so bad for a country, but to burn it in the giant furnace that is war is never a good idea, especially for a country that is an organized crime syndicate.