Russia's Deficit Reaches 5.731 Trillion Rubles in the First Half of 2026, Exceeding Annual Plan

The federal budget deficit of Russia increased to 5.731 trillion rubles in the first half of 2026, surpassing the annual plan. The main causes are attributed to a decrease in energy tax revenues and the financial burden of wartime expenditures. The Russian Ministry of Economic Development estimates the GDP growth rate for the first half of 2026 at 0.3%, with a 0.9% growth rate for the second quarter, and the official GDP announcement for the second quarter is scheduled for September 11. The Ministry of Finance reported that oil and gas revenues in the first half of the year decreased by 22.7% compared to the previous year, amounting to 3.661 trillion rubles. The decline in energy tax revenues has created a situation that requires adjustments in government spending, increased borrowing, and reinforcement of non-energy tax revenues. Reuters reported, citing government budget portal data, that federal expenditures and deficits in Russia for 2026 could exceed the official plan by more than 1 trillion rubles. The central bank views the fiscal deficit as a major inflation risk and lowered the key interest rate to 14.00% on July 24. Business sentiment has deteriorated, with the business climate index falling to -3.6 in July. Consumers are shifting towards cheaper products, and households are adjusting their shopping baskets in response to income pressures. The Kremlin claims that the economic difficulties are not at a 'critical' level; however, the situation of the fiscal deficit exceeding the annual target is a burden.

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