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Low oil prices raise Russia's deficit forecast for 2025 by three times due to the low price risks

The Russian Finance Ministry increased the estimate of the budget deficit for 2025 to 1.7% of the gross domestic product (GDP), from 0.5%, after reducing energy revenues by 24% in anticipation of a prolonged low oil price period.

The ministry reduced the forecast for 2025 oil-and-gas revenues to 8.32 trillion Russian roubles ($101.47billion) or 3.7% GDP, from 10.94 trillion Roubles or 5,1% GDP. The ministry also increased spending by 830 billion Russian roubles.

In 2025, the Russian government will have increased its state expenditures on national defense by a quarter to 6,3% of the gross domestic product (GDP), which is the highest since the Cold War. The Finance Minister Anton Siluanov has said that defence spending won't be affected.

The budget priorities are unchanged. "The budget priorities remain unchanged."

The Kremlin relies heavily on oil and gas revenues, which have accounted for between a third and a half (or more) of the total federal budget revenue over the last decade.

Oil prices fell more than 11% last month due to the slowdown in the global economy caused by trade wars.

Siluanov said that the announcement was made after a revision to the average oil price used in the budget calculation for 2025. The previous figure of $69.7 per barrel had been revised down to $56.

He added that "everything in the budget will be implemented regardless of external factors and conditions." $1 = 81.9955 Russian Roubles (Reporting and writing by Darya Kosunskaya, Gleb Bryanski, Ksenia Orlova; Editing by Sandra Maler).

(source: Reuters)