Status: 07.02.2023 8:56 a.m
To offset its high budget deficit, Russia has sold part of its gold reserves. Foreign currency was also sold. At the same time, revenues from the sale of oil and gas continue to decline.
A billion-dollar hole gapes in Russia’s state budget. In January, Russia therefore attacked its gold and currency reserves to cover gaps.
Selling Chinese Yuan and Gold
According to the Russian news agency Tass, Russia sold 2.27 billion Chinese yuan (equivalent to around 309 million euros) on the foreign exchange market in January, according to a statement by the Russian Ministry of Finance. But there were also 3.6 tons of gold from the state reserve. This corresponds to around 200 million euros. “The funds thus raised were transferred to the state budget account to cover the deficit,” the statement said.
According to government figures, the budget deficit in January was 1.76 trillion rubles (23 billion euros). Spending had skyrocketed to 3.1 trillion rubles (about 40 billion euros) in the past month. This means they are 59 percent above the previous year.
War Costs and Western Sanctions
The ministry has not given any reasons for the additional spending. However, these are likely to be mainly due to expenditure on the war against Ukraine, which has now been going on for almost a year. Due to the economic and financial sanctions against Russia, the government has fewer resources available on the revenue side. According to the report, state budget revenue from the oil and gas business fell by almost half (46 percent) year-on-year.
The reserves of foreign exchange, but also gold reserves could thus continue to be used in the coming months. According to the Ministry of Finance, Russia currently has reserves of 10.4 billion euros, 307.4 billion yuan and 551.2 tons of gold.
Warning of high deficit
At the end of last year, the government had already warned of a significantly expanded deficit. The Russian budget for 2023 will pose some financial challenges in view of a deficit, First Deputy Prime Minister Andrei Belousov said on a Russian TV station at the end of December. At the same time, Russia’s Finance Minister Anton Siluanov said Russia’s budget deficit could exceed the forecast 2 percent, Reuters reported.
Despite the massive Western sanctions because of the war against Ukraine, the Russian economy held up comparatively well last year: According to the fall forecast of the International Monetary Fund (IMF), gross domestic product (GDP) in 2022 is likely to have fallen by only 3.4 percent and could fall again by 2.3 percent in 2023.