The Russian treasury has been hit by the reduction of oil and gas revenues and the deterioration of the economy.
The Russian authorities need to look for additional revenues for the treasury, which has been hit by the reduction of oil and gas revenues and the worsening situation in the economy. The head of the Federation Council Committee on Budget and Financial Markets Anatoly Artamonov said this on Wednesday, The Moscow Times reports (link to article in Russian).
The senator said measures need to be taken "urgently" as "assessments of economic indicators" have become "more pessimistic" and commodity revenues are declining.
"We need to use all available resources to increase the revenue base," Artamonov urged. In particular, he said, it is necessary to consider the abolition of some tax benefits, the amount of which has now reached one third of the federal budget.
In addition, Artamonov continued, the level of shadow employment in Russia remains high, when individuals avoid paying income tax and contributions to social funds. We are talking, in particular, about salaries "in envelopes", the volume of which was previously estimated by the authorities at 10 trillion rubles a year.
Also, "our persistent reluctance to deal with privatization issues is perplexing," the senator said, adding that all the measures he listed are "reserves to replenish the budget" (quoted by Interfax).
Money is increasingly needed by the federal treasury, which spends every third ruble on the war - a record share since the Soviet Union. According to the Ministry of Finance, oil and gas revenues fell by 17% in the first half of this year, while total revenues grew by only 3%, meaning that in real terms (adjusted for inflation) they began to shrink. At the same time, expenditures jumped by 20%. As a result, in six months the budget has a "hole" of 3.7 trillion rubles - 6 times more than in the same period a year ago.
Reserves for patching budget "holes" are nearing exhaustion: the liquid assets of the National Welfare Fund, which before the war reached $120 billion, by July 1, 2025 reduced to $52.6 billion, that is, almost 2.5 times. If oil prices remain low, this reserve will be completely used up as early as next year, economists at the Russian Academy of National Economy and Public Administration warned.
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They shifted their entire economy onto war footing. That means they're in it for the long haul because they've basically gambled the future of the country on it.
Even when the war is over do you want to transition back to a peacetime economy or take further gains?
Yeah, there is no real way out for Putin. If he stops this war, his economy is in ruins. Even if sanctions are lifted, the world has gotten new suppliers for russian goods and even for russian oil & gas. Germany e.g. is rapidly changing its energy economy and won't buy as much gas as before. Millions of men will come back from the war, heavily traumatized and no real job prospects.
But even if Ukraine falls, he wins and Russia occupies the country: There will be a mass scale guerrilla warfare in a ruined country where many people fled. Sanctions will continue and what is left of Ukraine won't restore the russian economy.
And the war might still go on for a while, but it is totally unsustainable in the long run.
Plus, many people won't do business with them anyway.
Their only exit is either to win and progress towards the west, or split up and "rebrand" each region as not-russia.
People will do business with them if it's profitable, morality plays no role here.
It needs to be profitable, reliable, not damage their image.
Russia has billions in frozen assets and they sell oil at a discount. Putin has the money for massive infrastructure spending to grow the economy, if he wanted to.
if there wasn't the demographical bomb on its way, with over 10 million workers missing until 2030 and rising afterwards. There is no easy way out anymore.