There Is No More Money For Lukashenko

Russia is not moving at all headlong into a financial crisis.

Financial bloc officials are warning Putin that a full-scale financial crisis in Russia could erupt in the coming months. The horizon is from three or four months to six months. And if earlier, to see the signs of the impending crisis, it was necessary to study the statistics of Rosstat, now they are visible even to the naked eye.

In January, a wave of bar and restaurant closures swept across Moscow. According to the federation of restaurateurs, about 50 establishments closed during the month. This is twice as much as a month ago. Restaurants in Moscow were closed at this rate only in the year of the pandemic.

Because the restaurant business is a business that is more sensitive than others to changes in the economic situation. The situation in the economy is worsening, people's incomes are falling, and people are starting to save money. First of all, they start saving money on trips to restaurants.

And people's incomes in Russia are decreasing along with the reduction in production. The drop in production has begun in 20 of 28 sectors of Russian industry. As early as last summer, many Russian companies have been cutting workweeks or sending employees on unpaid vacations to cut costs. Currently, 14.5 percent of workers in Russia are part-time. And if you are partially employed, you are partially paid.

Another early sign of the approaching crisis is the situation in the real estate market.

The volume of unsold housing has reached a historic high and now accounts for 70 percent of all current construction.

Last week, Russia's largest developer, Samolet, made an open appeal to the government to give them a soft loan of 50 billion Russian rubles. But, first of all, even if the government gives this 50 billion, it won't save the company. It has 700 billion in debts. And secondly, it is doubtful that the company will get this money from the budget. Because there is no extra money in the Russian budget.

The Russian budget deficit for January is almost half of the entire annual plan. For the year, the Ministry of Finance planned a budget deficit of 3.7 trillion rubles, but in the first month alone it amounted to 1.7 trillion rubles.

"The high values of the deficit at the beginning of the year are mainly due to the advanced financing of expenditures within the year and will not affect the fulfillment of the target parameters of the structural balance for 2026 as a whole," the Russian Ministry of Finance said in a commentary.

The Russian Ministry of Finance said approximately the same thing at the beginning of last year. As a result, last year's deficit was almost five times higher than the original plan. This year there is a chance to significantly surpass last year's achievements.

Because, in fact, the problem is not "outstripping financing of expenditures". The problem is precisely revenue.

For the month, budget revenues as a whole fell 11.6 percent. Oil revenues collapsed almost twice and amounted to only 393 billion rubles. But even that is not the limit.

Last week, Trump announced a deal under which India would give up buying Russian oil in exchange for the elimination of increased duties on Indian goods. The deal appears to be working. Reuters reported on Sunday that Indian companies are refusing to buy oil from Russia.

"Major companies are not accepting offers from traders to load Russian crude in March and April. Most other refiners have stopped buying Russian oil," the agency wrote.

Even if India cuts its purchases of Russian oil by just 30 percent, Russia's budget deficit will be three times higher than the Russian Finance Ministry had planned. And the Americans are also not stopping their hunt for tankers in the shadow fleet. On February 9, they arrested another one, this time in the Indian Ocean.

The plans to compensate for the drop in oil revenues by raising taxes, primarily VAT, did not work. Russia's non-oil and gas-related budget revenues grew by just 4.5 percent in January.

"The budget situation is deteriorating sharply. Revenues will be lower and expenditures will be higher," Reita quoted a source familiar with the Russian Cabinet's closed calculations.

According to these calculations, the budget deficit at the end of the year could be 8-10 trillion rubles. But the Russian authorities, of course, are not going to save money on the war. But the Russian Ministry of Finance has already prepared proposals for a new tax increase and freezing financing from the national welfare fund for all investment projects not related to the war. Not surprisingly, Russia has no more extra money for its Belarusian ally.

Alexei Mazartov, "Belarusians and the Market".

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