Triple threat: Kremlin's budget crisis deepens amid record-low oil income

The author of the Resurgam Telegram channel discussed the issue.

Russia's Finance Ministry is heading into an increasingly precarious situation as it confronts three simultaneous financial pressures between now and February. The convergence of year-end budget gaps, new-year contracting obligations, and sharply declining oil revenues threatens to push Moscow deeper into a fiscal crisis.

The first challenge comes at the end of December, when the Kremlin must close out the year's financing. December typically sees payments drawn from reserves and borrowing, as the tax base has already been exhausted in previous months and budget shortfalls are deferred until year's end. This month will bring substantial cash needs or force spending cuts.

Second, January and February represent the two largest months for government expenditures as Moscow contracts state orders for the new year. While the Kremlin will prioritize directing resources toward military procurement using funds allocated for later months, this approach raises serious questions about how subsequent months will be financed.

These spending pressures coincide with a third critical factor: Moscow expects record-low oil revenues in December and January, down 50-55% compared to the same months last year. Meanwhile, all key non-oil and gas taxes are falling short of budget projections.

The analysis suggests these three months will push the Kremlin deeper into crisis through the need for extraordinary expenditures that must be financed all at once. Failure to secure funding would disrupt government contracting and potentially undermine the state's ability to fulfill planned orders, including military procurement.

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