Budget Deficit Exceeds $63 Billion, Even Security Services Lack Funding: What’s Happening To Russia’s Economy

Russia's federal budget deficit has grown by nearly one-third since the beginning of the year, reaching over $63 billion. This is a significant increase compared to the same period last year, with oil and gas revenue falling by 14%. The Central Bank head, Elvira Nabiullina, has urged the public not to fear mass layoffs in struggling companies, as she believes there's no point in supporting loss-making enterprises merely to preserve jobs.

The Interior Minister, Vladimir Kolokoltsev, expressed concern over a severe personnel shortage in security agencies, with the agency lacking over 200,000 employees. This staffing issue is partly due to low salaries, high workloads, and mass departures. The financial burden of supporting these agencies is being shifted onto regional budgets, which are already facing significant pressure.

Russian companies are struggling due to high loan interest rates, rising costs, and falling profitability, leading many to scale back production and cut staff. The auto industry in particular has seen significant job cuts, with more than half of dealerships in the Moscow region closing. Additionally, Ukraine has resumed strikes on Russian oil refineries, disrupting operations at 9 of the 35 largest refineries and causing fuel shortages across the country.