Russia's Finance Ministry Warned Of A Collapse In Oil And Gas Budget Revenues

The Kremlin may run out of money.

Oil and gas revenues of the Russian budget in 2026 may be "far below" the planned level, warned Russian Deputy Finance Minister Vladimir Kolychev.

According to him, the reason is in Russian oil prices, which so far "remain at a low level." In December, according to the Ministry of Economic Development, the average cost of a barrel of Urals fell to a 5-year low of $39. And January did not bring relief to oil producers, who are forced to give discounts of up to 50% to sell raw materials to India and China. According to Bloomberg, Urals prices have sagged to $35-37 per barrel, while the budget envisages $59.

Reuters estimates that the Finance Ministry will collect 420 billion rubles in taxes on oil and gas in January - 46% less than in the same month a year earlier. According to Kolychev, quoted by Interfax, the authorities intend to "compensate" for the falling commodity rent at the expense of the National Welfare Fund.

As a result, "the National Welfare Fund may run out of money this year," MMI analysts wrote. As of January 1, the fund had 4.1 trillion rubles of liquid assets - that is, free, unspent money. Since the beginning of the war, the gold reserves in the NWF have decreased by 71% - from 554 to 160 tons. And of the currency reserves, there are only Chinese yuan for about $30 billion - the minimum since the creation of the NWF in 2008.

To cover the falling revenues, the Ministry of Finance will have to withdraw about Br3 trillion from the NWF, and about Br700 billion more will be spent on investment costs, MMI estimates. This will leave in the fund only 400 billion rubles - an amount that covers about 3-4 days of expenditures of the federal budget.

Analysts VTB assess the situation a little more optimistically: according to their estimates, from the National Wealth Fund will have to withdraw 2.5 trillion rubles to cover the budget deficit, if oil prices and the ruble exchange rate remain at current levels. Economist Dmitri Polevoy estimates the revenue shortfall at Br1.1-1.4 trillion. According to his calculations, the National Wealth Fund may be enough for another 1.5-2 years.

The budget deficit in 2025 was Br5.7 trillion - five times more than the original plan of the Ministry of Finance. This year, the authorities planned to reduce the "hole" in the treasury to Br3.8 trillion by increasing VAT, taxes on small businesses, technological levies on machinery and electronics, as well as fines for citizens and businesses by Br300 billion.

But these plans are hardly feasible, according to analysts at Gazprombank. According to their calculations, the budget deficit will amount to 5-5.5 trillion rubles "due to the higher growth rate of government spending and restrained export revenues."

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