Russia cuts budget spending 35% as treasury cash runs short
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Russia's Finance Ministry cut most budget spending by 35% after the treasury's cash balance turned negative in April 2026. Finance Minister Anton Siluanov warned Prime Minister Mikhail Mishustin of possible delays in mandatory payments. The cuts spared only five protected areas, including military spending and social programs.
Key Facts
- Russia's treasury cash balance turned negative in April 2026, an unusual situation for the country's budget system.
- The government cut funding for most budget items by 35%, exempting military spending, public sector salaries, social programs, regional aid, and debt servicing.
- The January–July budget deficit reached 6.5 trillion rubles, or 2.8% of GDP, 70% above the annual plan.
- Without the cuts, the deficit could have reached 9 trillion rubles, or 3.8% of GDP, by the end of June.
- Finance Minister Anton Siluanov warned Prime Minister Mikhail Mishustin of possible delays in mandatory payments, Bloomberg reported citing sources close to the government.
Liquidity Crisis
Russia's treasury cash balance turned negative in April 2026, an unusual situation for the country's budget system. Previously, the state had maintained a cash reserve for years to ensure uninterrupted funding of expenditures. The treasury typically placed free funds in financial instruments, a practice that had been in place for decades, according to former Deputy Finance Minister Oleg Vyugin. The liquidity shortage intensified even as oil revenues rose, reaching a six-month high in April after a price spike caused by the war with Iran.
Spending Cuts
The Russian government cut funding for most budget items by 35%. The cuts did not affect military spending, salaries for public sector employees and military personnel, or social programs. The protected list also included regional aid and servicing of the state debt. Agencies were instructed to postpone non-urgent spending and prepare for a 15% staff reduction.
Deficit Outlook
Without these measures, the deficit could have reached 9 trillion rubles, or 3.8% of GDP, by the end of June. For January–July, the deficit amounted to 6.5 trillion rubles, or 2.8% of GDP, 70% above the annual plan. The Finance Ministry's internal forecast does not expect a significant improvement before the end of 2026. According to Bloomberg sources, the budget gap may widen further.
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Russia cuts budget spending 35% as treasury cash runs short
