Russia's war chest swells: Higher oil prices boost budget in 2024

From the start of 2024, Russia has recorded a significant increase in budget revenues from the sale of oil and gas. This is due to higher barrel prices and taxes levied on the extraction sector. As a result, the Kremlin can continue to finance the war in Ukraine, reports state.

In publishing data on budget revenues for the first four months of 2024, biznesalert.pl refers to: "Kommersant", the Russian consulting firm RBK, and neftegaz.ru. The service reports that from January to April 2024, these revenues amounted to 4.157 trillion rubles (almost £37 billion according to the current exchange rate), which means an increase of 82.2 percent year on year.

As assessed by reports, this is a consequence of the increase in oil price and a one-time extraction tax payment. Previously, Bloomberg added another factor: a weakening ruble. A lower exchange rate helped Russian fiscal services to estimate budgetary inflows.

In the first case, this results from the higher price of the Urals variety barrel, which in recent days has risen to $73. A year ago, its price fluctuated around $50 as a result of the imposition of a price cap on oil exported by Russia by the G7 and the European Union. Although the price of the commodity rises, Brussels is still convinced that sanctions work.

Meanwhile, Moscow raised the aforementioned extraction tax for the duration of the war. Companies from this sector pay it four times yearly: in March, April, July, and October. Thus, tax revenues reached 3.8087 trillion rubles (almost £31 billion) and nearly doubled.

Thus, the overall budget revenues of Russia in the first four months increased by about 50.1 percent year on year to 11.684 trillion rubles. Meanwhile, budgetary expenditures amounted to 13.168 trillion rubles (an increase of 21.5 percent year on year). As a result, the deficit reached 1.484 trillion rubles, however, budget shortfalls are covered by the National Wealth Fund, which is fueled by surpluses from the sale of hydrocarbons.

Imposing the financial burden of war actions on companies from the extraction sector has caused a hiccup for Gazprom. The gas giant recorded a loss of 629 billion rubles in 2023, the first such situation since 1999.

That's why Gazprom began selling large properties in Moscow and the Moscow region after recording the largest loss for decades. Among them are "office buildings on Stroiteley Street, the Imperial Park Hotel & Spa complex in the Pierwomajskoje settlement, Rogozino village, non-residential premises on the first floor in the house on Nowoczeremuszkińska Street, and also a parking for 96 cars near the company's main headquarters in Moscow" – reported the service themoscowtimes.com.

However, the corporation assures that the decision was made due to "the completion of the relocation of the Gazprom Group companies to Saint Petersburg".

Recently, there have been adverse reports from India – from the Kremlin's point of view. Negotiations with the country concerning overdue billions of rupees for Russian oil have been going on for over a year and failed. None of the variants proposed by Moscow were realized – reported "The Hindu Businessline".

"It has been decided that the money of Russian companies will remain in India" – reads the newspaper report, which refers to a highly placed source.