Putin may run out of money for war this summer

Take a look for yourself:

• In 2022, Russia's monthly check for the war averages $9.5 billion – Forbes.
• In 2023, Putin increased the defense budget to about $12 billion per month.

War spending in tandem with a record drop in oil and gas revenues will devastate the treasury. Here is the data on the implementation of the Russian budget in January this year:

• Expenditures (including military) amounted to $41 billion;
• revenues – $18 billion;
• budget deficit – $23 billion;
• the hole is now being patched up at the expense of the reserve fund (the so-called national welfare fund), which has about $91 billion left;
• Forbes predicts that at this rate, the Russian reserve fund will dry up in June-July, and then the Kremlin will have to choose between public sector salaries and the war.

The economic scenario has its variations.

Optimists point to new sanctions that will bite the Russian economy hard. For example, a European embargo on Russian oil products has been in effect since February 5. CREA estimates that Russia will lose an additional €3.6 billion per month. If the Kremlin does not change anything, the so-called “stabilization period” may come even earlier.

“CREA estimates that Russia will lose an additional €3.6 billion per month. If the Kremlin does not change anything, the stabilization period may come even earlier”

Pessimists recall Citibank's prediction that the Kremlin will run out of money for the war in 2.5 years. This scenario is based on a moderate budget deficit. But the analysis was published at the end of January, before the Russian Ministry of Finance reported the biggest drop in revenues since the 2008 crisis.

I understand that many experts and "economic astrologers" have long since turned on their stopwatches, promising complete economic collapse for Russia. But...

This is the first time that such predictions are backed up by certain figures.

In any case, the Russian budget crisis has already begun in December and January. Russia spends more than it earns, and the situation will not change until the sanctions are lifted. And as soon as Russia runs out of the reserve fund, Putin will either have to let inflation go or scale back the war.

Source

About the author. Orest Sohar, journalist, editor-in-chief of Obozrevatel

The editorial board does not always share the opinions expressed by blog authors.