Moscow faces deepening budget crisis amid economic slowdown – Resurgam

 International information and analytical community Resurgam shared their analysis.

Russia's projected budget deficit has tripled from 1.2 trillion to 3.8 trillion rubles — now exceeding the liquid portion of the Russian National Wealth Fund. To cover the gap, the fund has started selling off gold and yuan at a rate of 1.6 billion rubles per day.

The Ministry of Finance has fallen into a trap, Resurgam writes. There are no spare funds left to stimulate the economy, and yet taxes are being raised — during a recession.

Oil revenue estimates were cut by 2.6 trillion rubles, with the assumed price of Urals crude slashed from $69.70 to $56 per barrel — though current trading is even lower, at around $48.

At the same time, inflation projections jumped from 4.5% to 7.6%. Resurgam notes this figure reflects overall inflation, including military-industrial output, and that consumer inflation is likely twice as high.

Revenues are now expected to fall by 1.8 trillion rubles, while spending increases to 42.3 trillion rubles — a record high. Still, the government aims to boost tax income through massive hikes:

• Personal income tax by 180%
• Corporate income tax by 110%
• VAT by 17%

“These numbers look unrealistic even in normal times,” Resurgam says. “In today’s shrinking economy, they’re pure fantasy.”

Official data shows the civilian economy entered a recession in Q1 2025. Wholesale trade fell 2.3%, mining dropped 3.7%, and industrial growth — previously propped up by the military sector — slowed from 5.7% to just 1.1%. Retail growth also weakened, and rail transport fell 6.1%.

“The key issue isn’t just the numbers — it’s the speed of decline,” the report states.

With high interest rates and a growing tax burden, Resurgam states the government risks a cycle of stagnation and inflation — or stagflation. “Without addressing the core issue — the imbalance caused by the war — the deficit will only grow,” Resurgam concludes.