Russia may have to make sacrifices to solve budget deficit, says UK Defence Intelligence

UK Defence Intelligence believes that the Russian Federation may have to reduce its contribution to the National Wealth Fund, which it increasingly uses to finance the war against Ukraine, and resort to austerity measures that could slow its economic growth.

Source: UK Defence Intelligence review dated 5 February, as reported by European Pravda

Details: UK intelligence analysts believe that it is unlikely that Russia will achieve its revenue target spelled out in its 2024 budget, and that the Russian government may need to implement additional measures to finance its expenses.

As noted, the Russian government has ambitious plans to increase spending by 26% in 2024. These plans rely on a 22% growth in revenue, with oil and gas revenues projected to increase by almost 25%.

"It is likely that the government will need to reduce its contributions to the National Wealth Fund and increase domestic taxes and debt to fund its planned expenditure," the review states.

UK intelligence asserts that such a policy will almost certainly have negative implications for the economy in the medium and long term, including continuing inflationary pressure and restraining economic growth.

They also point out that whilst the National Wealth Fund is ostensibly intended to ensure the welfare of the Russian people, it is increasingly used to finance the Russian invasion of Ukraine, with its assets diminishing by 10% in 2023.

Background: 

• UK Defence Intelligence, in a previous review, analysed corrupt schemes within the Russian army, stating that this undermines the effectiveness of the military, but that the likelihood of reducing the level of corruption is low.

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