Russia's budget deficit nearly doubles annual target in just seven months

Data released by Russia's Finance Ministry on Tuesday show the federal budget deficit reached 6.5 trillion rubles in January-July, nearly double the 3.8 trillion rubles (1.6% of GDP) planned for all of 2026. The figures were reported by The Moscow Times.

Tax revenues grew 8.8% over the seven months to 22.1 trillion rubles (about 220 billion euros), but spending rose far faster, up 14.5% to 28.6 trillion rubles. Compared with the same period in 2025, the deficit grew 1.4-fold.

The Moscow Times noted the deficit is comparable to Moscow's entire annual budget, St. Petersburg's budget over four years, or the combined annual budgets of 11 major Russian regions.

Oil revenue drops as growth stalls

Russian analysts say the fiscal picture keeps worsening. Oil and gas revenues fell 17% in January-July, and a recent VAT hike is only barely offsetting the loss. The economy grew just 0.3% in the first half of the year, and there is a risk that this minimal growth could turn into contraction in the second half, which would strip the budget of an additional trillion rubles in tax revenue. Taking these factors into account, analysts project the deficit could reach 8-10 trillion rubles by the end of the year.

Since launching its full-scale invasion of Ukraine in 2022, Russia has spent 50 trillion rubles, or roughly 500 billion euros, on the war. To fund this, it has used up three-quarters of its National Wealth Fund, introduced export and currency taxes, raised various domestic taxes, and confiscated private assets worth about four trillion rubles.

Agathe Demarais, a senior fellow at the European Council on Foreign Relations, said the situation does not mean the Russian regime will run out of money in the near term, but the authorities are now forced to reach into ordinary people's pockets, and the number of politically acceptable ways to cover the deficit is shrinking fast.