Status: 01/10/2023 5:15 p.m
The Russian economy is suffering from the war the country is waging against Ukraine. It is not only the high expenditure that is causing problems for the state budget – partial mobilization is also becoming a problem.
The Russian state was in the red last year because of the high costs of the war against Ukraine. The deficit adds up to around 44 billion euros, as Finance Minister Anton Siluanov announced. This corresponds to 2.3 percent of gross domestic product (GDP).
In view of the massive western sanctions because of the war against Ukraine, the Russian economy has held up comparatively well: according to the fall forecast of the International Monetary Fund (IMF), GDP is likely to have fallen by only 3.4 percent in 2022 and could fall by another 2. 3 percent drop.
Before the war began on February 24, the government had aimed for a surplus of 1 percent of economic output. Last September, President Vladimir Putin forecast a surplus of almost half a trillion rubles.
Deficit could increase further in 2023
However, due to the war, the government has been forced in recent months to tap into the sovereign wealth fund filled with billions and to take out new loans at auctions from domestic lenders. Siluanov recently acknowledged that the western price cap on Russian oil could widen the budget deficit in 2023. A larger deficit is possible if “revenues are lower than planned,” the minister told reporters.
The Russian central bank recently warned of increased economic risks as a result of the war. “The labor shortage is increasing in many sectors due to the effects of partial mobilization,” said the monetary authorities. Since September, this has led to hundreds of thousands of Russians either being drafted into the army or leaving the country. They are no longer available for the job market.