Russia braces for budget stress as oil revenues decline

Russia is currently facing significant economic challenges as Finance Minister Anton Siluanov has highlighted the need to revise budget rules amid declining oil revenues and global economic instability. In a recent meeting, he emphasized the essential adjustments needed to prepare for potential budgetary stress that could arise due to falling oil prices and ongoing trade wars affecting the economy. Siluanov noted that the country should bolster its fiscal reserves and change outdated budget rules that divert oil revenues exceeding a $60-per-barrel threshold into the National Wealth Fund (NWF). He argues the fund should support three years of uninterrupted financing for essential expenditures to protect public finances from the hazardous fluctuations of the global economic landscape. This perspective comes from the recognition that the global situation requires focused attention on the resilience of the public finances in light of diverse economic scenarios. The Finance Minister pointed out the ongoing global trade wars as the main risk impacting Russia’s export opportunities, requiring the nation to recalibrate its spending and financial management strategies to reflect new economic realities. The situation is compounded by a noted decrease in oil and gas revenues, which now constitute just one-quarter of the federal budget. Preliminary estimates indicated a significant drop, with revenues totaling 2.64 trillion rubles ($28.4 billion) in the first quarter of 2025, down 9.8% from the same period in the previous year. In addition to Siluanov's comments, Prime Minister Mikhail Mishustin stressed the importance of macroeconomic stability and the necessity to prepare for market fluctuations. He urged the ministry to implement measures designed to prevent budget risks and maintain a robust response to ongoing economic uncertainties. With recent oil price declines, particularly after the US imposed trade tariffs and OPEC+'s agreement to increase output, the Russian government is pressured to adapt to a more volatile economic environment and ensure that every ruble spent yields greater returns for the economy.