Russia's Federation Council approves law on adjusting federal budget for 2025

MOSCOW. Oct 29 (Interfax) - The Federation Council at its meeting on Wednesday approved a law adjusting the federal budget for 2025, with the document clarifying the parameters for budget revenues, expenditures, and the deficit, taking into account the current macroeconomic situation and budget execution for January-August 2025.

Federal budget revenues will total 36.562 trillion rubles, expenditures will total 42.3 trillion rubles, and the deficit will total 5.736 trillion rubles, or 2.6% of GDP. Revenues will decrease by 1.944 trillion rubles, expenses will remain at the same level, and the deficit will increase by 1.944 trillion rubles compared to previously approved figures.

Oil and gas revenues are expected to total 8.7 trillion rubles in the federal budget in 2025, a rise of 336.48 billion rubles from the previously projected figure. Non-oil and gas revenues are estimated at 27.91 trillion rubles, 2.28 trillion rubles less than previously projected.

The explanatory materials note that the adjustment is owing to a change in the forecast for socio-economic development. Specifically, GDP is expected to grow 1% versus 2.5% previously, inflation is expected to be 6.8% versus 7.6% previously, the exchange rate 86.10 rubles/$1 versus the planned 94.30 rubles/$1, and the price of Russian oil $58 per barrel versus $56/bbl previously.

"Manufacturing industries provide the foundation for supporting industrial growth. One of the risks to industrial growth remains the labor shortage, which could only be offset by a dramatic increase in labor productivity as part of the measures being implemented to ensure technological sovereignty," the Budget and Tax Committee said in its conclusion on the document.

The Accounts Chamber notes that the expectation of a slowdown in inflation appears realistic absent external shocks, though it warns about risks of shortfalls in income tax and VAT revenues, as well as revenues from the sale of confiscated assets. The chamber also notes reserves for additional income in the form of dividends on shares owned by the Russian government totaling 81.3 billion rubles.

The Budget and Tax Committee emphasizes that the share of oil and gas revenues in the budget structure is declining from 30.3% in 2024 to 23.3% in 2025, indicating a decrease in public finances' dependence on external conditions.

The budget deficit is proposed to be financed by increasing domestic borrowing by 2.2 trillion rubles, excluding the National Wealth Fund (NWF). The government estimates that the liquid portion of the NWF should reach 4.4 trillion rubles by the end of 2025, out of a total of 13.6 trillion rubles.

The Russian government is authorized to allocate budget appropriations for 2025 totaling just over 1.391 billion rubles in order to ensure balanced funding for specific activities in the fuel and energy sector and financial support to implement specific activities in the North Caucasus Federal District, as well as 212.2 million rubles to ensure balanced funding for specific activities in the fuel and energy complex in the Far Eastern Federal District.

"Colleagues, it is absolutely clear that we will need to learn to live more frugally in the coming three-year period. Implementing a number of investment projects will likely have to be postponed for some time, and both regions and senators need to be prepared for this," Anatoly Artamonov, head of the budget and financial markets committee, said during a discussion of the law at a meeting of the Federation Council.