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By Brendan Cole
Senior Reporter
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Russia faced another large budget deficit in 2024, driven by the record military spending as the costs of the war Vladimir Putin started in Ukraine continue to mount.
Figures from Russia's Finance Ministry showed that the country's overall deficit was more than three trillion rubles ($30 billion) for the third year in a row and while revenues increased by over a quarter, expenditures rose by a similar amount.
Newsweek has contacted Russia's finance ministry for comment.
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Why it matters
Since Vladimir Putin's full-scale invasion of Ukraine, Russia has reoriented its economy toward war operations through development of the military industry. But sanctions, high inflation and worker shortages have buffeted the economy and raised questions about the sustainability of Putin's military spending plans.
What to know
Russia recorded in 2024 a budget deficit exceeding three trillion rubles for the third consecutive year, soaring to 3.49 trillion rubles ($34.39 billion), according to the country's finance ministry.
While revenues increased by 26 percent to 36.71 trillion rubles ($368 billion), spending also climbed by roughly the same amount (24.2 percent) to 40.19 trillion rubles ($403 billion).
Russia's finance ministry said there was an increase in spending at the end of the year funded by additional oil and gas revenues, which were partly intended to pay advances on 2025 expenses, state news agency Interfax reported.
Russia's deficit as a percentage of gross domestic product (GDP) has decreased from 1.9 percent to 1.7 percent, but this is wider than the ministry's goal of 0.9 percent of GDP, Reuters reported.
The agency noted that excluding revenues from its main exports of oil and gas, Russia's deficit had widened to 7.3 percent of GDP compared with 7 percent of GDP in 2023.
Social media users noted the finance ministry's figures show that Russia is struggling to weather the cost of the war.
However, Grzegorz Drozdz, market analyst at Invest.Conotoxia.com, told Newsweek that Russian public debt stands at 19.5 percent which is much better than the European average.
European Union government debt accounted for 81.5 percent of the bloc's nominal GDP in June 2024, according to the EU's statistical service Eurostat.
Drozdz said the Russian economy is showing resilience despite massive spending on armaments and the war in Ukraine, and rising tax revenues will see the deficit shrink to 0.5 percent of GDP. He also said that Russia's GDP is projected to grow at a rate of 1.4 percent annually, despite sanctions imposed by the international community.
What people are saying
Russia's finance ministry on Interfax: "Russia's federal budget in 2024 was executed with a deficit of 3.485 trillion rubles or 1.7 percent of GDP."
Geopolitical analyst, Alexander Kokcharov on X: "This is the second highest budget deficit in Russia since 2020, the year of Covid pandemic and disruption to the economy.
Grzegorz Drozdz, market analyst at Invest.Conotoxia.com told Newsweek: "The Russian economy continues to demonstrate resilience despite massive spending on armaments and the war in Ukraine."
What happens next
Russian defense spending will continue apace between now and 2027 and by then will account for at least 40 percent of its budget.
This year, Russia will spend 13.5 trillion rubles ($135 billion) on the military, nearly one third more than in 2024 with similar amounts earmarked for 2026 and 2027.
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