Raise the plan: the budget deficit of the Russian Federation may grow to 4.4 trillion

The total budget deficit at all levels in 2025 may reach 4.4 trillion rubles, which is three times higher than the initial plan, analysts surveyed by the Central Bank predict. The financial plan has already been amended: the shortage of the federal treasury alone will grow to 3.8 trillion. Last year, the forecast was also revised, but the actual deficit exceeded expectations. The gap between income and expenses can lead to an increase in public debt and expenses for its maintenance, the suspension of projects and a decrease in assistance to the regions. However, the shortage of even 2% of GDP is not critical, experts assure. Why the authorities systematically underestimate the state of the treasury and what it is fraught with — in the material of Izvestia.

Why is the budget deficit increasing?

In 2025, the consolidated budget, which includes federal and regional budgets, will have a deficit of 2% of GDP, or 4.4 trillion rubles. This was shown by the results of the Central Bank's May macroeconomic survey (Izvestia analyzed it). For the calculation, the regulator used the answers of 27 economists. Their estimate is three times higher than the initial forecast of the Ministry of Finance — it expected a deficit of 1.2 trillion, follows from the documents to the financial plan (the editors have read them).

The analysts surveyed by the Central Bank increased their estimate from the last survey by 0.5 percentage points, or 1 trillion. This may be due to the amendments to the federal budget for 2025, which were adopted by the State Duma in the second reading on June 10.

Photo: IZVESTIA/Konstantin Kokoshkin

According to the adjustments, treasury revenues will decrease by 5%, to 38.5 trillion, and expenditures will increase by 2%, to 42.3 trillion. Accordingly, the federal budget deficit will triple to 3.8 trillion. The press service of the Central Bank told Izvestia that changing the parameters of the financial plan may also require adjusting the monetary policy of the regulator. The editorial board sent a request to the Ministry of Finance.

Following the increase in the shortage of the federal treasury, the deficit of the consolidated treasury is also increasing. According to the Treasury, as of April 2025, budgets at all levels have been formed with a minus of 2.4 trillion.

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The consolidated budget deficit in 2025 may indeed reach 2% of GDP, Mikhail Kosov, Head of the Department of State and Municipal Finance at Plekhanov Russian University of Economics, estimated. The main reasons are falling oil prices, declining exports, rising defense spending and social obligations, as well as a likely slowdown in economic growth, which will lead to a decrease in tax revenues, he said.

— A decrease in the ruble revenues of exporters leads to an increase in the federal budget deficit. During the months of strong national currency, the treasury may miss trillions of rubles. As a result, a vicious circle arises: a strong ruble leads to an expansion of the deficit, and the inability to reduce costs provokes an acceleration of inflation and the maintenance of a high key, which supports the national currency," said Andrei Barkhota, Candidate of Economics.

Photo: IZVESTIA/Dmitry Korotaev

At the same time, the growing shortage of the federal treasury may affect the regions if financial assistance from the center is reduced, Mikhail Kosov emphasized. According to him, the budget deficit of the constituent entities of the Russian Federation may expand further due to a decrease in their own income (for example, income tax revenues due to business stagnation) and an increase in mandatory expenses due to inflation (for healthcare, education, housing and communal services).

The regions are doing well: the budgets of the constituent entities of the Russian Federation have managed without a deficit

Expert RA's data shows a gradual slowdown in the economy in most regions.

What is the threat of a growing shortage in the treasury

The shortage of all budgets persists for the fourth year in a row due to the difference between revenues and expenditures of the federal treasury. At the same time, starting in 2022, the deficit is higher than the forecast of the Ministry of Finance. So, in 2022 it amounted to 3.4 trillion (against a projected surplus of 1.3 trillion), in 2023 the shortfall was 3.2 trillion (the forecast was minus 2.9 trillion), and in 2024 - 3.5 trillion (against an estimate of 2.1 trillion).

The actual deficit regularly exceeds the plan due to the cautious forecasts of the Ministry of Finance, emergency spending on anti-crisis measures and dependence on raw materials, said Mikhail Kosov from Plekhanov Russian University of Economics. In addition, the treasury is under pressure from both external and internal challenges: sanctions reduce export revenue, and this leads to a drop in tax revenues, including for oil and gas items, added Vladimir Chernov, analyst at Freedom Finance Global.

Photo: IZVESTIA/Eduard Kornienko

"Making an inaccurate forecast can be a problem, as it reduces confidence in budget policy on the part of investors and business representatives, complicates long—term planning (for regions and companies) and leads to a rapid depletion of reserves (funds from the National Welfare Fund are used)," Mikhail Kosov explained.

In addition, as the deficit increases, so does the amount of government debt, and hence the cost of servicing it, the expert continued. In such circumstances, subsidies to the regions may be cut and some infrastructure projects may be suspended, he added.

And although the overall level of government debt in Russia is now one of the lowest in the world, the cost of servicing it is high due to the high key interest rate, said Lazar Badalov, associate professor at the Faculty of Economics at RUDN University. This reduces the effectiveness of borrowing as a tool to cover the deficit and creates an additional burden on the budget.

In general, a shortage of 2% of GDP is a normal phenomenon, said Vladimir Klimanov, Director of the IPEI Center for Regional Policy at the Presidential Academy. In world practice, a level of up to 3% of GDP is considered acceptable.

However, as a rule, such a shortage stimulates economic growth in the country, Lazar Badalov added. Therefore, the deficit itself is not a threat — it is important what the funds are used for: if it is used to invest and support demand, it just supports GDP.