Pressures on the russian state's ability to finance its planned budget in 2025 will almost certainly increase due to the recent drop in oil prices. Lower oil price expectations have resulted in the Ministry of Finance of russia revising down its forecast for 2025 oil and gas revenues by almost 25 per cent, from 10.94 trillion rubles (USD $135bn) to 8.32 trillion rubles (USD $103bn). Meanwhile, the 2025 budget deficit forecast has increased from 0.5 per cent of GDP to 1.7 per cent of GDP, the UK Defense Intelligence reports.
Despite this, russia almost certainly continues to prioritize sustaining elevated military expenditures at the expense of economic resilience. Russia has revised total forecast spending for 2025 up by 830 billion rubles (USD $10.2bn). If oil prices remain low, russia will almost certainly further deplete its financial reserves to sustain high government spending.
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As Defense Express previously reported, on March 21, 2025, the Central Bank of russia (CBR) decided to hold the key interest rate at 21 per cent. Interest rates are at their highest level in over 20 years, compared to a pre-war interest rate of 8.5 per cent in January 2022. While interest rates remain high, the number of corporate bankruptcies will highly likely increase in russia.
Earlier, Defense Express also reported that inflationary pressures make it highly likely that russia will spend more on defense than budgeted for in 2025.
It is almost certain that inflation in russia will be higher than the Central Bank of russia (CBR) target of 4 per cent in 2025. This is despite the CBR efforts to reduce inflation by increasing interest rates from 7.5 per cent in June 2023 to 21 per cent in December 2024. The actual rate of inflation in 2024 was likely higher than the officially reported figure.
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