May 21: Elina Ribakova, Russia’s revenues are down…but…

As published on May 18, 2023

Russia’s revenues are down…but…

Federal budget is back to a large deficit in April. A deficit of 3.4 trillion for the first four months of 2023—already 17% above the full-year budget target.

War is expensive. Expenditure continued to trend up in April despite the stories of pre-payment that would have explained Jan-Feb pick-up. Revenues continue to underperform (-22% vs. 2022M1-4) but as big of a problem are soaring expenditures (+26%)

For now, Russia can finance the war. NWF currently stands at 12.5 trillion rubles ($155.0 billion or 8.4% of GDP). Roughly 45% of the remaining holdings are not liquid and cannot easily be repurposed for the budget.

Russian financial system is a closed circuit; only domestic banks can finance fiscal deficits. Banks hold about 10% of their assets in government paper, they could buy more, but then they won't have money for the "reverse structural transformation". Russian oligarch Deripaska… twitter.com/i/web/status/1…

More can be done to reduce Russia's revenues. @USTreasury report is a fantastic initiative to increase the G7 cap/embargo accountability.

Almost all shipments from Kozmino are above $60 cap, yet about half are shipped or insured by G7 companies.

OFAC already sent a message to Kozmino port service companies: "we see you".
ofac.treasury.gov/media/931641/d…

Read here on what more can be done to strengthen oil cap/embargo compliance @KSE_Institute @sanctionsgroup papers.ssrn.com/sol3/papers.cf…

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