Russia's economy proved unexpectedly resilient in the face of Western sanctions last year, but a return to pre-conflict levels of prosperity may be far off as more government spending is directed towards the military and price caps squeeze Russia's crucial energy export earnings.
Oil and gas revenues were 46.4% lower at 947 billion roubles in Jan-Feb than in the same period last year, the finance ministry's preliminary data showed, with overall budget revenues for the month down 24.8%.
Spending was 51.5% higher in the first two months of 2023, at 5.74 trillion roubles. In the same period last year, Russia had recorded a surplus of 415 billion roubles.
The finance ministry stopped publishing monthly budget fulfilment data last year. Monday's data suggests that the monthly budget deficit narrowed to 821 billion roubles in February, down from a record 1.76 trillion roubles in January. Reining in the deficit may ease market concerns about tighter monetary policy. The central bank has warned that a further widening of Russia's budget deficit may compel it to raise interest rates from current levels of 7.5%.
The bank will next meet to set interest rates on March 17.
Moscow relies on income from oil and gas - last year around
11.6 trillion roubles - to fund its budget spending, and has
been forced to start selling international reserves to cover a
deficit stretched by the cost of the Ukraine conflict.
Russia has so far managed to reroute oil exports from
Europe, mainly to India, China and Turkey, which snapped up
cheap barrels despite the Group of Seven's $60 price cap on
Russian crude.
Data has shown that Russia has also managed to sell oil
above Western price caps, blunting the impact of restrictions.
($1 = 75.4705 roubles)
(Reporting by Darya Korsunskaya and Alexander Marrow
Editing by Gareth Jones)
