The Russian Finance Ministry reports that revenue has decreased by 21% in the first quarter of 2022 compared to the same period last year, with the biggest reduction coming from oil and gas revenues, which have decreased by up to 45%. This drop in income is in line with the recent decrease in oil prices and Russia’s reduced exports of gas. Russia has placed a price ceiling on oil to avoid removing the volume of oil from the world market and causing oil prices to skyrocket. The country’s budget deficit for the first three months of the year was equivalent to SEK 300 billion, with a projected deficit of SEK 380 billion for the entire year. The director of the Eastern Economic Institute at the Stockholm School of Economics, Torbjörn Becker, believes that this deficit will impact ordinary Russians, as the state will not be able to prioritize expenses related to people’s well-being. The Russian ruble has also experienced a sharp decline against the US dollar due to a lack of foreign currency in Moscow and the sale of Western companies in Russia.
According to the Russian Finance Ministry, as cited by state-controlled Interfax, revenue for the first three months of the year has decreased by 21 percent compared to the first quarter of 2022.
The biggest reduction accounts for greatly reduced oil and gas revenues. There, the drop in income is as much as 45 percent compared to the same period last year.
– That figure sounds reasonable and is quite consistent with the price drops we’ve had for oil and that Russia has not been able to export as much gas, says Torbjörn Becker, head of the Eastern Economic Institute at the Stockholm School of Economics.
Becker states that a price ceiling has been placed on oil so that Russia would not stop exporting oil on the world market. Instead, Russia would be paid less.
– They didn’t want to cause that on the global oil market, then oil prices could have skyrocketed. It may seem stupid that China and India are buying this oil, but the point of the price ceiling was that they did not want to remove the volume of oil from the world market so that the rest of the world would not be hit so hard, says Torbjörn Becker.
According to the Russian the Ministry of Finance, the country’s budget deficit was equivalent to SEK 300 billion during January through March this year. For the entire year, the Ministry of Finance has calculated a deficit of SEK 380 billion.
Photo: Juliana Wiklund
Torbjörn Becker believes that this is also an expected result.
– Already in January, February, Russia had burned 80 percent of the deficit it had expected during the year. Now you have to make much tougher priorities and look for new sources of income. The companies that are still making money will surely be taxed more heavily.
Ordinary Russians are coming to notice the large deficit, says Torbjörn Becker.
– The state will not be able to provide higher pensions, you will not be able to build roads, schools and hospitals as you had planned. Russia will probably continue to prioritize costs related to the war. The other budget items must adapt to it. The Russian people will notice this.
So the large deficit will hit the Russian population further?
– Already now, they have chosen not to prioritize the expenses that go to people’s well-being, but prioritize a war apparatus. So the Russian people will notice this.
The Russian ruble also suffered a sharp decline against the US dollar on Friday, writes the Reuters news agency. According to Reuters, the decline in value is due to two factors: the lack of foreign currency in Moscow and the sale of Western companies in Russia.
One dollar was traded for 83 rubles and one euro for 91 rubles, which is the highest exchange rate since April 6, 2022, writes the Russian state-controlled news agency Tass.