Russia's Fiscal Maneuver: Tapping Reserves Amid Oil Price Woes

The Russian government plans to draw 447 billion roubles from its reserves to balance the 2025 budget, following a surge in the deficit due to low oil prices. The finance ministry increased the deficit from 0.5% to 1.7% of GDP, opting against emergency measures or increased borrowing.

The Russian government has announced plans to withdraw 447 billion roubles from its fiscal reserves to balance its 2025 budget. This decision, representing 14% of the country's remaining liquid assets, follows a dramatic rise in deficit projections caused by persistently low oil prices.

The finance ministry recently raised the 2025 budget deficit estimate from 0.5% to 1.7% of GDP after cutting expected energy revenues by 24%. Global oil prices have plunged to a four-year low, derailing initial plans to bolster the National Wealth Fund (NWF).

Finance Minister Anton Siluanov confirmed there are no immediate plans for tax increases or spending cuts. Instead, he suggested lowering the 'cut-off' oil price, a strategy to save more oil revenues, but was shelved for now as financial priorities shift amid continued military operations in Ukraine.

(With inputs from agencies.)