Real budget revenues in 65 of Russia's 85 regions were lower in 2025 than they were before the start of the full-scale war in 2021. At the same time, inflation-adjusted spending exceeded 2021 levels in 52 regions, contributing to a rapid increase in budget deficits.
The main reasons for the decline in revenues were reduced federal transfers and lower corporate profit tax receipts. In real terms, non-repayable transfers fell by approximately 1.1 trillion rubles, while corporate profit tax revenues declined by another 820 billion rubles. The reduction in federal transfers has been linked to the completion of several targeted government programs and the redistribution of funds at the federal level. The decline in profit tax receipts reflects weaker financial performance by major companies, particularly in the coal and steel industries.
The steepest revenue declines were recorded in the Kemerovo region, where budget revenues fell by nearly 39%, followed by the Vologda region with a 34.5% decline and Ingushetia with a 30.8% drop.
Across all 85 regions, inflation-adjusted corporate profit tax revenues fell by 16.6%, with declines recorded in 51 federal subjects. The sharpest drop occurred in Kuzbass, where profit tax revenues collapsed by nearly 79%. They also fell by more than 60% in the Belgorod, Kursk, Lipetsk, Vologda, Murmansk, and Orenburg regions, as well as in the republics of Karelia and Khakassia.
Despite declining revenues, most regional governments were unable to make significant spending cuts. In 52 regions, real expenditures remained above 2021 levels, while only 33 regions reduced spending. The largest cuts were recorded in Ingushetia, where expenditures fell by 30%, followed by the Kaliningrad region (15.4%), Chechnya (14.6%), and Karelia (14.5%).
Social spending has been particularly affected. Seventy-six of Russia's 85 regions reduced real healthcare spending. Funding for housing and public utilities also declined sharply, falling by about 77% in Yakutia and 70% in Kuzbass. Education spending was also cut in real terms in several regions, including the Kursk, Arkhangelsk, Astrakhan, and Kemerovo regions, as well as the republics of Komi, Dagestan, Chechnya, Khakassia, Buryatia, and Ingushetia.
