Russia’s federal budget recorded a deficit of $69.9 billion for January–February 2026, nearly double the previous estimate by the Ministry of Finance of $43.3 billion. In just the first two months of the year, the cash shortfall has already exceeded the full-year planned deficit of $50.5 billion, indicating a complete loss of control over the fiscal trajectory.
The situation is further complicated by an unprecedented discrepancy between reporting by the Federal Treasury and the Ministry of Finance. The Treasury reported revenues at $31.36 billion, compared to $59.79 billion in the Ministry of Finance’s reporting — almost a twofold difference that goes beyond any technical error. Expenditures, however, are nearly identical: $101.47 billion versus $103.10 billion respectively.
Western economists interpret this gap as evidence of systemic uncertainty in budget accounting and likely overstatement of revenues in finance ministry forecasts. The relatively small divergence in spending suggests that the Kremlin is not planning to cut expenditures even amid a catastrophic decline in revenues.
The main factor behind the failure is the collapse in oil and gas revenues, which fell to $18.1 billion in the first quarter of 2026, down 45.5% year-on-year — the worst result since 2022. At the same time, spending remains inflated due to large allocations for security and defense, creating a structural imbalance that cannot be resolved without a radical shift in priorities.
Russian analytical centers, including the pro-Kremlin CMASF, predict that the annual deficit will be two to three times higher than official plans, especially if energy revenues remain at current levels while expenditures continue to grow.
The current situation demonstrates a breakdown in institutional coherence in budget reporting, with agencies providing contradictory data. The deficit will have to be covered by treasury balances and privatization proceeds — sources that do not ensure long-term stability.
If these trends continue, the Kremlin will face depletion of reserves and a choice between unpopular spending cuts and the search for new sources of financing. Even if energy prices recover, revenue growth potential will be constrained by weak investment activity, structural industrial imbalances, and logistical disruptions.
