What the state is getting rich: Russia's budget received record revenues
Russian budget revenues in December reached Br4 trillion, the highest figure since 2011. According to the results of 2024, the increase will be 26% - up to 36.7 trillion rubles. Why Russia managed to make record earnings despite the continuing severe restrictions, and what made a tangible contribution to the budget - in the material of "Izvestia".
Income and expenditures
According to the preliminary estimate of the Ministry of Finance, the volume of federal budget revenues in 2024 amounted to 36.7 trillion rubles - 26% higher than the volume of revenues for 2023.
The volume of federal budget expenditures for 2024 amounted to 40 1, trillion rubles, exceeding the previous year's figures by 24.2% year-on-year. In accordance with the transitional provisions of the "budget rule", in 2024, the expenditures were executed based on the size of the primary structural deficit within the limits of 3.1 trillion rubles, the agency specifies.
According to the Russian economic authority, total budget revenues reached more than Br4 trillion ($40 billion) in December, up 28% compared to the same month of the previous year.
As Bloomberg notes, this is the highest level recorded in the ministry's data since January 2011, which was not hampered by U.S. sanctions aimed at disrupting foreign trade payments and limiting export revenues.
Asia and the shadow fleet
Indeed, the sanctions, contrary to Western expectations, have had a limited impact on Russian commodity exports. And there is an explanation for this. First, a significant part of it has been turned to the East.
- Russia has increased oil and gas supplies to China and India, the main buyers of Russian energy resources. Gas exports to Europe increased by 18-20%, reaching a total volume of about 5-53 billion cubic meters. Pipeline gas supplies increased by 14% to 32.1 billion cubic meters, while exports of liquefied natural gas (LNG) grew by 17% to 33 million tons," says Nikolay Vavilov, a specialist in TR's Strategic Research Department.
Secondly, Russian exporters continue to use the services of the so-called shadow fleet, and commodity sales continue to be conducted through numerous intermediaries. In January 2025, the Biden administration imposed new sanctions before leaving office: 183 tankers fell under the restrictions.
However, according to forecasts, the reduction in maritime oil exports will be insignificant - only 10% of the 2023 volumes, so the sanctions are not restrictive for the Russian economy, the analyst emphasizes.
Factors have developed
Thus, according to the Ministry of Finance, oil and gas revenues amounted to 11.1 trillion rubles, exceeding the same period of the previous year by 26.2% year-on-year. This is the second highest annual result in Russian history, second only to 2022 (Br11.6 trillion then).
Alexander Zaitsev, CEO of Atomic Capital, emphasizes three key reasons for the next record.
- First, the draft Russian federal budget for 2024 included a currency exchange rate of 80-85 rubles per U.S. dollar. The average annual RUB exchange rate was 92.6, and by the end of the year the ruble was gravitating towards 100 per dollar. The weakening of the national currency had a positive impact on exporters' revenues and expenses: the former are still mostly received in foreign currency, while the latter are incurred in Russian currency.
The positive dynamics of oil and gas revenues last year was also influenced by the price situation on the energy market. The Middle East conflict, drone attacks on the Russian energy structure, and the maintenance of voluntary supply cuts by OPEC+ countries - all this supported oil prices. As a result, Russian export grades traded on average at $70 per barrel in 2024 (instead of the previously projected $65).
Finally, a strong acceleration of Russian commodity exports towards the end of the year was given by the strengthening economic activity in China in the last quarter of 2024 - a key market for Russian energy exporters.
VAT, inflation and budget balance
At the same time, oil and gas revenues account for only about 30% of total budget revenues. In recent years, the government has been actively pursuing a policy to reduce their share, favoring non-oil and gas revenues.
According to the Ministry of Finance, non-oil and gas revenues of the federal budget in 2024 amounted to Br25.5 trillion and increased by 26% year-on-year. The volume of non-oil and gas revenues at the end of 2024 significantly exceeded the estimates provided for in the budget law for 2025-2027), including in terms of the largest tax sources (turnover taxes).
- VAT (value added tax) is undoubtedly the main source of revenues here. Thanks to it, the state treasury received Br13.5 trillion in 2024 with total revenues of Br36.7 trillion, which is 16% higher than a year earlier," says Alexander Zaitsev.
This result is a consequence of high inflation, which is not the most positive phenomenon for the country's economy as a whole. According to Rosstat, last year's inflation exceeded 9.5%.
- Inflation has become the most significant domestic factor affecting the growth of budget revenues, and provided more than a third of cash receipts to the treasury. As prices rise, tax revenues, primarily VAT, also grow," points out Eduard Khristianov, First Deputy Chairman of the Board of PJSC RosDorBank.
Significant growth of non-oil and gas revenues is also due to the fact that the Ministry of Finance was looking for all kinds of ways to replenish the treasury at the expense of other revenues. Thus, various taxes, excises, customs duties, state duties, and utilization fees were raised.
- The growth of domestic VAT collections was facilitated by the increase in nominal GDP, the value of imports and the dollar exchange rate, as well as by the adjustment of taxation of the simplified taxation system. Also, the growth of other non-oil and gas revenues was contributed by dividend receipts from state-owned companies and one-time large receipts from the use and disposal of confiscated property, as well as receipts of voluntary contributions paid from the sale of Russian businesses by foreigners to Russian residents," explains Evgeny Shatov, partner at Capital Lab.
Finally, analysts largely attribute the growth of Russian budget revenues to the efforts of the Ministry of Finance to minimize the budget deficit. At the end of the year, the budget deficit amounted to Br3.485 trillion (1.7% of GDP), which is Br0.2 trillion higher than the planned figure. As a result, the growth of revenues and expenditures turned out to be plus or minus balanced.
Переведено сервисом «Яндекс Переводчик»
