Business & Finance

Russia 2020 budget deficit at 3.8%/GDP, highest in a decade

  • Running out of options to bolster public finances, Russia more than doubled domestic borrowing in 2020, raised some taxes and increased state spending as it relaxed a budget rule that shields the economy from external shocks.
Published January 21, 2021

MOSCOW: Russia ran a budget deficit of 4.1 trillion roubles ($55.8 billion) in 2020, or 3.8% of gross domestic product, the widest in a decade as the coronavirus pandemic forced Moscow to increase spending and weak oil prices capped income.

Citing preliminary data, the finance ministry said on Thursday that the deficit was however better than expected due to increased tax collections. It had forecast a deficit of 4.4% of GDP, later revising that to 3.9%.

Still, it was the highest deficit since the 2009-2010 financial crisis when Russia recorded budget gaps of 5.9% and 3.9% of GDP, respectively. Before the pandemic, the finance ministry expected a 2020 budget surplus of 0.8% of GDP.

Running out of options to bolster public finances, Russia more than doubled domestic borrowing in 2020, raised some taxes and increased state spending as it relaxed a budget rule that shields the economy from external shocks.

Russia's extra state spending to support the economy last year reached 4.5% of gross domestic product but is expected to shrink to 1% of GDP in 2021. The budget deficit is forecast to narrow to 2.4% of GDP this year.

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