Russia’s Budget Revenue Surges to Record in December Despite Sanctions

Total revenue in December reached more than 4 trillion rubles ($40 billion), up by 28% compared with the same month of the previous year, according to Bloomberg calculations based on Finance Ministry data published late Monday. That’s the highest level recorded in ministry data that starts from January 2011.

The US and its allies have been seeking to stop the Kremlin’s war machine by limiting export revenues and imposed more sanctions on Russia’s energy industry and banks that service it late last year. That triggered a collapse in the ruble and depressed Russia’s foreign trade in December. Exports dropped by 19% last month compared to the previous year, and imports shrank by about 8%, according to central bank data published on Tuesday.

Still, oil and gas income spiked by a third in December from the previous year and increased by 26% for 2024, according to the Finance Ministry, while other sources of revenue posted a similar advance for the full year due to taxes and dividends amid robust economic growth.

“The volume of non-oil and gas revenues in 2024 significantly exceeded estimates in the 2025-2027 budget law, including from the largest tax sources,” the Finance Ministry said in a statement.

The increase in revenue allowed the government to spend more than ever, with total expenditure for the month of 7.15 trillion rubles, breaching the previous record set in December 2022.

Russia last year posted its widest fiscal gap since the Covid pandemic in 2020 at 3.5 trillion rubles or 1.7% of gross domestic product. The government ran a budget deficit for a third year as President Vladimir Putin’s February 2022 invasion of Ukraine led to huge increases in state spending on the military and measures to support domestic business amid sweeping sanctions.

Total revenue in 2024 rose by 26% to 36.7 trillion rubles, while expenses increased by 24% to 40.2 trillion rubles. The Russian currency lost about 12% against the dollar in the period, according to central bank data.

The Kremlin continues to ramp up spending on the war as its forces slowly advance in Ukraine. About a third of its budget is expected to be spent on military needs in 2025, according to the budget law.

The budget’s execution in 2024 confirms doubts that a planned increase in spending this year of only 3.2% is realistic, according to Alfa-Bank.

“We expect that the growth in expenditures this year will be higher, leading to a larger budget deficit,” the bank’s analysts said in a note.