Federal budget revenue collection improved in June but not enough

RUSSIA ECONOMICS - In Brief 10 Jul 2026 by Evgeny Gavrilenkov

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The Ministry of Finance released preliminary federal budget execution data for 1H26, showing non-oil-and-gas revenues jumping m-o-m by about one-third, largely due to some taxes being paid quarterly. Still, such a sharp m-o-m rise seemed unusual, as it’s often much more moderate. While this could suggest an economic improvement in 2Q26, other factors, like increased administrative pressure, might also be at play. So far, the ministry has only disclosed revenue data by source for VAT, which was up 22.6% y-o-y. Overall, non-oil-and-gas revenues grew 16.3% y-o-y in 1H26. Meanwhile, oil-and-gas revenues dropped 22.7% y-o-y in 1H26, and even temporary higher oil prices didn’t help much due to the ruble’s appreciation. Although the ruble has weakened slightly in recent weeks and oil prices have fallen, oil-and-gas revenues are still likely to underperform this year. The budget projects R8.9 trln in oil-and-gas revenues for 2026, but with only R3.7 trln collected in 1H26, that target seems out of reach. If current oil prices hold, these revenues might reach about R7.5 trln. Non-oil-and-gas revenues are budgeted at roughly R31.7 trln, with nearly R15.0 trln already collected, but total revenues could still end up R0.5–0.9 trln short of target. Interestingly, the 2026 budget assumes expenditures will be just 2.7% higher than in 2025, which would mean a real-term contraction if inflation hits around 6% or more. In 1H26, spending was up 16.1% y-o-y, but it didn’t seem to stimulate growth much, as the economy likely stagnated. It’s possible this year’s expenditures could end up about 10% higher than in 2025, pushing the total to around R47 trln, compared to the current budgeted fi...