The Ministry of Finance of the Russian Federation has begun preparations for budget sequestration for 2026, proposing that state institutions cut unprotected expenditures by 10%. The main reason for this step was the sharp drop in oil and gas revenues, which halved in the first two months of this year. This was reported by Reuters, writes UNN.
Details
According to sources familiar with the situation, new infrastructure projects, construction, and major repairs of roads will be primarily affected by the cuts.
At the same time, the Ministry of Finance assures that the optimization will not affect the financing of military operations in Ukraine and the fulfillment of social obligations, such as the payment of salaries to public sector employees and pensions.
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Such measures are aimed at keeping the budget deficit within the planned 1.6% of gross domestic product and curbing the growth of public debt.
The Ministry of Finance has informed institutions that distribute budget funds about the need to cut expenditures. Now they are thinking about what exactly to cut. This is always done by optimizing non-essential expenditures. Some new projects, such as road construction or repair, will be suspended.
The final decision on the scale of cuts will depend on the volatility of world oil prices, which are currently affected by the war between the US and Iran. Despite an overall 11% drop in Russian budget revenues, the Kremlin is trying to maintain the stability of public finances through the Central Bank's tight monetary policy. However, the general population is already feeling the effects of the crisis due to high inflation, although mass layoffs in the public sector are not yet predicted.
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