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MOSCOW:
The Russian government is preparing a possible 10% cut to all “non-sensitive” spending in this year’s budget, sources told Reuters, but the final decision will hinge on the sustainability of the oil price rise triggered by the war in Iran.
Two of the four sources close to the government, who are privy to the finance ministry’s communications, mentioned the 10% reduction, while the other two said the cut is being discussed without specifying the figure.
The sources said the cuts will not be across the board and will spare politically-sensitive military spending as well as socially-sensitive spending, such as salaries to public sector workers or welfare payouts.
“This is always done by optimising non-essential expenses. Some new projects will be put on hold, such as construction or road repairs. These are likely to be considered for cuts,” another source said.
In the first two months of 2026, Russia’s budget energy revenues halved while overall revenues fell by 11%. Russia, which had to raise the budget deficit estimate twice last year, plans a deficit of 1.6% of gross domestic product in 2026.
The situation reversed sharply after the US and Israel illegally attacked on Iran and the closure of the Strait of Hormuz led to oil prices skyrocketing with the demand for Russian oil rising, and the US even considering lifting sanctions on Russia.
