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UK intel: Russia may lean more on debt and taxes amid 2024 budget pressures

Russia’s 2024 budget relies on optimistic 22% revenue growth to fund 26% higher expenditure, but projected oil and gas revenue gains may fall short, with government having to weigh measures like less National Wealth Fund contributions or more taxes and debt, per UK intelligence.
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The Red Square in Moscow. Credit: The Center for European Policy Analysis
UK intel: Russia may lean more on debt and taxes amid 2024 budget pressures

Russia’s 2024 budget relies on 22% revenue growth, especially almost 25% from oil and gas, to fund 26% expenditure rise. Revenue shortfalls will likely require policies like less National Wealth Fund contributions or more taxes and debt, according to the British Defense Ministry’s 5 February intelligence update.

The UK Defense ministry suggests that if the projected revenue growth fails to materialize, Russia will face a gap between its planned expenditures and actual income. To fund the 26 percent increase in the 2024 budget, Russia may need to reduce contributions to its National Wealth Fund, while also raising domestic taxes and taking on additional debt. The National Wealth Fund is intended to promote Russia’s long-term economic health but has increasingly been tapped to finance the invasion of Ukraine.

The ministry wrote:

  • It is unlikely that Russia’s planned revenue target for 2024 will be met as laid out in the budget plan. It is likely the government will need to consider other policy measures to fund its planned expenditure.
  • The Russian government has ambitious plans to increase expenditure by 26 per cent in 2024. This is reliant on optimistic expectations of revenues rising by 22 per cent, with oil and gas revenues expected to increase by almost 25 per cent. It is likely that the government will need to reduce its contributions to the National Wealth Fund and increase domestic taxes and debt to fund its planned expenditure.
  • These policies will almost certainly have adverse effects on the economy in the medium to long term by maintaining inflationary pressures or constraining future economic growth. The National Wealth Fund is ostensibly for the long-term economic welfare of the Russian people but is increasingly being used to fund its invasion of Ukraine, with the value of its assets falling 10 per cent in 2023.

In 2023, the British Defense Ministry reported that Russia planed to boost its military spending by 68% in 2024, diverting resources away from healthcare and education, and placing greater financial burdens on Russian businesses.

Meanwhile, the US Treasury Department suggested that Russia’s GDP would be more than 5% bigger if it had not invaded Ukraine, as the country’s defense spending surpassed one-third of its 2023 budget.

Earlier, the UK Defense Ministry said that heating systems were failing across Russia, leaving residents in sub-zero distress, as years of military prioritization over infrastructure combine with wartime strains on budgets and workforces.

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