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

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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.

Russia

Russia relaxes diesel export curbs after talks with Trump

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Russia has announced that it will ship 500,000 tonnes of diesel fuel to the global market under a partial lifting of its diesel export ban, enacted as part of measures concerning the Ukraine crisis and energy markets.

A statement from the Russian government said the decision was implemented in accordance with understandings reached between Russian President Vladimir Putin and US President Donald Trump.

Under the decision, which came into effect on 10 October, an initial phase of 500,000 tonnes of diesel fuel will be supplied to the global market.

“Following the rescinded decision, Russian oil companies, in coordination with the government, will immediately begin signing diesel fuel supply contracts with foreign business partners,” the government statement said.

Assessing the matter, Deputy Prime Minister Aleksandr Novak stressed that the decision would not affect the interests of Russian consumers.

Noting that diesel fuel is produced from Russian crude at domestic refineries, Novak stated that production volumes are sufficient both to meet all domestic market requirements in full and to ship the specified quantities to the global market.

The ban on diesel fuel exports in Russia was initially put into effect on 31 January 2026, covering only non-producing companies.

The government tightened the restrictions on 9 July by expanding them to include direct producers. Previously announced to remain in place until the end of October, the ban was partially relaxed in light of current developments.

Vladimir Putin and Donald Trump held a telephone conversation on 9 October. Following the call, US President Trump announced that an agreement had been reached on the supply of Russian diesel.

Trump said Russia had agreed to send more than 300,000 tonnes of fuel to American and global markets in the initial phase, 500,000 tonnes in November, and 1 million tonnes thereafter.

Trump also stated that an additional shipment of 3 million tonnes could follow at a later stage, adding that they expect this agreement to reduce diesel fuel prices rapidly.

Following the conversation, the US Department of the Treasury, on Trump’s instructions, issued a temporary general licence exempting Russian diesel fuel transactions and shipments to the US—previously prohibited under sanctions—until 7 April 2027.

Putin, in a statement after the call, confirmed Russia’s readiness to supply crude oil and petroleum products to American and global markets, noting that this would have a positive impact on the world economy.

Putin also noted that the two leaders discussed prospects for resolving the conflict in Ukraine, the situation surrounding Iran, and bilateral relations, agreeing to maintain contacts through presidential envoys, intelligence agencies, and other institutions.

A statement issued by Novak’s office after the call said Russia was prepared to ship diesel to the US within October.

Novak stated that export volumes could be increased in November and December as refineries emerge from scheduled maintenance.

Novak also conveyed that Moscow views positively Washington’s steps towards stabilising the global energy market and normalising energy trade.

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Drone strike shuts down Yandex data centre in Russia’s Ryazan region

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A drone strike has hit a data centre belonging to Russian internet company Yandex in the town of Sasovo, located in the Ryazan region.

The company announced that a fire triggered by the attack damaged part of the infrastructure and resulted in a complete shutdown of the facility’s operations. No casualties or injuries were reported in the incident.

In a statement, Yandex said competent authorities and relevant teams were working at the scene to remediate the damage.

Owing to the facility being knocked offline, it was noted that some of the company’s online services might temporarily become inaccessible to users.

The company provided no details regarding the financial scale of the damage or when the data centre would be brought back into service.

Shares slide, cloud infrastructure curbs introduced

Following the developments, Yandex shares fell by more than 3.4% as of 10:10 Türkiye time.

A drone threat alert was reportedly communicated to residents of the Ryazan region at 23:48 on the night of 7 October, with the alarm lifted at 02:46 on the morning of 8 October. The facility in Sasovo had commenced operations in 2014.

In an advisory issued via the Yandex Cloud Alerts channel, it was reported that power issues were occurring in the system’s “ru-central1-b” availability zone.

The company stated that efforts to transfer data workloads to other availability zones had been completed and that services in other zones continued to operate normally.

However, it was noted that temporary restrictions could be imposed on the creation of new resources within the cloud infrastructure. According to data from outage-monitoring platform Downdetector, an increase in user complaints concerning Yandex, Yandex Cloud, and the real estate platform CIAN was recorded on the morning of 8 October. Reports were observed to have originated predominantly from Moscow and surrounding regions.

Data centre targeted for first time after logistics warehouses

Whether the attack directly targeted the data centre remains unconfirmed. Nevertheless, as of 8 October, this went on record as the first drone strike directed at data centres in Russia.

Beginning in the summer months of 2026, warehouses belonging to Russia’s leading e-commerce platforms had faced drone attacks.

Fires at several warehouses owned by the company Wildberries caused hundreds of billions of roubles in losses for sellers, after which logistics centres belonging to the company Ozon were also targeted.

Both companies amended their contractual terms, shifting liability for damages arising from attacks onto sellers.

Yandex facilities had previously experienced a widespread outage on 30 March 2025 due to a transformer failure, which temporarily disabled services including Yandex Cloud, Yandex Music, and Yandex Lavka.

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US and Russian figures discuss American stake in Nord Stream lines

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Senior officials from Russia and the US have reportedly discussed involving an American investor in the Nord Stream natural gas pipelines.

According to a report by the Reuters news agency based on five sources, those taking part in contacts included Kirill Dmitriyev, head of the Russian Direct Investment Fund (RDIF) and the Russian president’s special representative for investment and economic cooperation with foreign states, and Jared Kushner, son-in-law of the US leader.

Two sources providing information on the scope of the discussions said that while it remains unclear how detailed the consideration of the Nord Stream topic was, the matter nevertheless remains on the agenda.

Kushner reportedly views business-oriented cooperation as an instrument in initiatives aimed at ending the war in Ukraine.

A potential agreement could reportedly offer US investors an opportunity to profit from energy shipments to Europe once the war ends.

White House states no recent contacts have taken place

A White House official told Reuters that no negotiations regarding Nord Stream have been conducted recently.

The official emphasised that any agreement with Russia would require approval from the US International Development Finance Corporation (DFC) and the US Department of the Treasury, adding that such steps must yield benefits for US taxpayers and companies.

Another US official described reaching an understanding in the medium term as unlikely due to existing obstacles.

The natural gas pipelines are subject to US and European Union sanctions. A spokesperson for the German Federal Ministry for Economic Affairs and Energy stated that the approval of the German federal government is mandatory for the pipelines to be brought back into service, adding that the Berlin administration does not support such a step.

The spokesperson also recalled that Germany has secured alternative supplies to Russian gas.

The ownership structure of Nord Stream also features among the issues complicating the ground for negotiations.

In the consortium operating the project, Russian energy giant Gazprom holds a 51% stake, while the combined share of two German partners stands at 31%.

The remaining shares are held by France- and Netherlands-based companies.

A source speaking to the agency stated that the German partners wish to retain their stakes in order to preserve their influence in the project should Gazprom’s shares be sold.

What had American investor Lynch proposed?

The concept of involving a US financier in the Nord Stream projects had also surfaced in 2024.

American investor Stephen Lynch, founder of Monte Valle Partners, who conducted commercial activities in Russia for 20 years, had applied to the US administration for a licence allowing him to bid if the Nord Stream 2 pipeline were put up for auction.

Lynch described this potential move as an opportunity to keep Europe’s energy supply under control until the fossil-fuel era ends, as well as leverage against Russia in peace negotiations.

The Alternative for Germany (AfD) party described the possibility of transferring the pipeline to Lynch as an illustration of the German government’s irrational policy.

Separately, The New York Times (NYT) reported earlier this month that Ukraine-related contacts between Russia and the US were expanding to include a multi-billion-dollar oil deal covering Lukoil’s foreign assets.

The assets in question included Lukoil’s refineries in Eastern Europe as well as filling stations in the US.

NYT sources reported that discussions in this framework were also addressed during a meeting between Russian President Vladimir Putin, Steven Witkoff, and Kushner.

The sabotage of the Nord Stream pipelines took place in September 2022, with three of the four lines damaged by explosions.

One string of the Nord Stream 2 pipeline, which had not yet been commissioned at the time, remained intact.

The Federal Security Service of the Russian Federation (FSB) classified the incident as an act of international terrorism, while Putin claimed that “Anglo-Saxons” were behind the attack.

In investigations into the incident, judicial proceedings were pursued against several Ukrainian citizens, including professional diver Vladimir Juravlyov, suspected of planting explosives off the island of Bornholm, and Sergey Kuznetsov, who allegedly skippered the yacht Andromeda.

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