Russian regional budget deficits nearly double to 294 billion rubles in Q1

According to an activity report published by the Russian Accounts Chamber, the number of regions running a budget deficit in the first quarter of 2026 rose to 56, up from 46 in the same period of the previous year.

The report noted that the combined budget deficit of these regions nearly doubled, increasing from 153.9 billion rubles to 294 billion rubles.

The rise in the number of deficit-running regions was driven primarily by those experiencing deep fiscal imbalances. The number of regions where the budget deficit exceeded 10% of their tax and non-tax revenues climbed to 35, up from 23 in the first quarter of 2025. Conversely, the number of low-deficit regions—where the deficit remained below the 10% threshold—slipped from 23 to 21.

The report ranked the highest ratios of budget deficit relative to regional tax and non-tax revenues as follows: the Jewish Autonomous Oblast (50.5%), Kemerovo Oblast (50%), Vologda Oblast (32.9%), and the Komi Republic (32.7%).

Among the deficit-running regions, 12 saw simultaneous declines in both revenues and expenditures, while expenditures outpaced revenues in 27. According to the Accounts Chamber, a budget deficit was recorded for the second consecutive year in 39 regions, and for the third consecutive year in 11 regions.

In absolute terms, Kemerovo Oblast recorded the highest deficit at 21.3 billion rubles. This was followed by the Khanty-Mansi Autonomous Okrug at 20.3 billion rubles, Krasnodar Krai at 19.9 billion rubles, Irkutsk Oblast at 17.4 billion rubles, and Moscow Oblast at 15.2 billion rubles.

On the other hand, of the 34 regions that posted a budget surplus, the surplus did not exceed 5 billion rubles in 23 regions, while it ranged between 5 billion and 33 billion rubles in 10 regions.

Moscow was the sole exception to this trend, posting a budget surplus of 276.9 billion rubles. Moscow Mayor Sobyanin had previously described deficits in the capital’s budget as non-critical.

Outlining the overall financial condition of the regions, the report stated:

“Regional revenues amounted to 5.5144 trillion rubles, representing 20.7% of the projected volume for the year, while expenditures reached 5.3744 trillion rubles, or 18.4% of the annual target. Excluding Moscow, revenue growth stood at 0.2%, while expenditure growth reached 5.2%.”

A decline in revenues affected 29 regions, while 19 regions registered a drop in expenditures. During this period, 15 federal subjects recorded a simultaneous drop in both revenues and expenditures, whereas 14 regions faced rising expenditures despite falling revenues.

In 20 of the 29 regions with declining revenues, both corporate tax receipts and unrequited federal budget transfers fell simultaneously; in nine of these regions, revenues have contracted for the second consecutive year.

Federal budget deficit exceeds projections

Russian Finance Minister Anton Siluanov announced in June that the country’s 2026 federal budget would undergo revisions, and that the budget deficit would run slightly above the planned 3.786 trillion rubles, which represents 1.6% of GDP.

Discussing funding mechanisms to cover the gap, Minister Siluanov noted that several alternatives were available, including the utilization of budget balances and asset sales.

Although the statutory budget deficit for 2026 was set at 3.8 trillion rubles (1.6% of GDP), the deficit for the January-April period has already reached approximately 6 trillion rubles (2.5% of GDP).

According to Finance Ministry estimates from early May, federal budget revenues for the January-April 2026 period fell 4.5% year-on-year to 11.7 trillion rubles.

Oil and gas revenues plunged 38.3% to 2.3 trillion rubles, dragged down by earlier declines in oil prices.

Conversely, non-oil and gas revenues rose 10.2% to 9.4 trillion rubles, driven by a 20.2% surge in value-added tax (VAT) collections, which reached 5.3 trillion rubles.

Budget expenditures rose 15.7% compared to the previous year to reach 17.5 trillion rubles, fueled by accelerated procurement processes and advance payments.

For the full year of 2025, federal budget revenues stood at 37.2 trillion rubles against expenditures of 42.9 trillion rubles, resulting in a deficit of 5.6 trillion rubles, or 2.6% of GDP.