Russia’s Ministry of Finance has reported a significant year-on-year reduction in the federal budget deficit for the first quarter of 2025, despite a decline in oil and gas revenues. According to preliminary data released on April 8, the deficit stood at ₽2.17 trillion, down by ₽1.88 trillion compared to the same period in 2024.
Total revenues reached ₽9.05 trillion, marking a 3.8% increase year-on-year, while expenditures surged by 24.5% to ₽11.22 trillion. The improvement in fiscal balance was driven by a 10.6% rise in non-oil and gas revenues, which contributed ₽6.41 trillion — supported by strong value-added tax (VAT) receipts and a stable tax base established in late 2024.
In contrast, oil and gas revenues dropped by 9.8% to ₽2.64 trillion. The ministry attributed the decline to the absence of one-off mineral extraction tax payments that had boosted 2024 figures, as well as lower average crude oil prices. However, energy revenues still exceeded the baseline thresholds set by Russia’s fiscal rule, which governs the use of windfall oil income.
Spending patterns showed notable volatility. January saw an annualized increase of over 64% due to upfront payments on contracts, while growth in February and March slowed to 9.1%. Some 2025 spending commitments were covered by year-end carryovers from 2024, helping smooth the deficit trajectory.
The ministry emphasized that the current fiscal performance remains within the structural limits set by law. Notably, the federal budget even registered a surplus in March — a result of the flexible fiscal rule that permits use of the National Wealth Fund (NWF) to compensate for shortfalls in oil revenue.
While the narrowing of Russia’s budget deficit offers short-term relief, the broader fiscal structure remains fragile. The state’s reliance on non-recurring revenue patterns, coupled with declining oil income and high military-related spending, signals continued exposure to external shocks. The resilience of the system will be more rigorously tested in the coming months, as the economy enters a low-revenue season amid global energy market uncertainty.
