In July, Russia's budget deficit was the biggest in 11 years. Despite serious problems, there are still reserves. And even to support Lukashenka.
Euroradio recently asked experts how severe the shortage of money in Russia is and how long Putin would be able to freely finance the war in Ukraine and support the Belarusian regime.
Sanctions are working
The Russian Finance Ministry followed the path of its Belarusian colleagues and hid some of the statistics. However, it is clear from the truncated data that there are problems, says Sergey Aleksashenko, former Deputy Minister of Finance and former Deputy Chairman of the Central Bank of Russia. In July, the budget deficit was 892 billion Russian rubles -- about $14.7 billion.
In July, the Russian budget received 26% less than it did in July 2021. Oil and gas revenues, revenues from VAT, excises, and profit tax fell. At the same time, the Russian authorities have increased spending by 25% compared with July 2021, says Aleksashenko.
In the first seven months of 2022, Russia's revenues will still be 482 billion rubles more than expenses, which is nearly $8 billion. Still, the budget will have more deficit during the year, says Vladislav Inozemtsev, Russian economist and head of the Center for Postindustrial Society Research.
"I don't think it will continue at the same [rapid pace]. It seems that at the beginning of the quarter, there were additional expenses related to income indexation and so on".
In any case, the volume of Russian shipments abroad will go down. Plus, economic activity in the country will fall, and current tax revenues will also fall. The expenditures will remain very high due to the war in Ukraine and the need for state support for economic programs.
"There will be enough money for the war for a long time"
Sergei Aleksashenko told Euroradio that "Russia has enough money for the war for a long time to come." Vladislav Inozemtsev is of the same opinion:
"There hasn't been a budget deficit in recent years that hasn't been covered by reserve funds. This year, there have already been claims that around two trillion rubles [almost $33 billion - Euroradio] will be taken from the National Welfare Fund to finance the budget".
At the beginning of August 2022, the National Welfare Fund had 12.2 trillion rubles -- about $201.1 billion. If there is ever not enough of it, the Russian government may increase the national debt.
Vladislav Inozemtsev believes that the budget deficit will not affect Putin's support of the Belarusian regime.
"Looks like Putin is not going to give up on Lukashenka. The average amount of Belarus' borrowings from Russia in recent years is somewhere between two and three billion dollars a year. Even if Belarus requires twice as much, this is still very little compared to the costs of the war. They are about $300-400 million a day. Thus, finding a few billion dollars for the Belarusian regime will not be a problem".