Russia Covers Up Key Budget Spending Data as War Swells Deficit

Russia unexpectedly halted publication of detailed data on budget spending, casting public finances deeper into secrecy as the government wrestles with soaring costs linked to the war in Ukraine.

(Bloomberg) — Russia unexpectedly halted publication of detailed data on budget spending, casting public finances deeper into secrecy as the government wrestles with soaring costs linked to the war in Ukraine.

The Finance Ministry stopped disclosure of high-frequency outlays on its electronic budget portal that previously showed up-to-date information about spending on different categories. The statistics enabled analysts to examine trends in expenditure and to calculate how much of the budget was going toward activity deemed classified.

The Finance Ministry and Russia’s Treasury didn’t respond to a request for comment. Monthly budget reports that include uncategorized spending figures are still being published by the ministry with a lag of a week or more.

Russia already curbed publication of critical data, including reporting of oil output, after the US and its allies imposed sanctions in response to President Vladimir Putin’s February 2022 invasion of Ukraine. As the war has dragged on, authorities also began to keep an unprecedented share of its spending away from public scrutiny. 

In December, Putin said there were “no limitations” on military spending for the war. 

The federal budget deficit meanwhile reached 3.41 trillion rubles ($41 billion) in the first five months of 2023, narrowing slightly in May but still exceeding the full-year plan by almost a fifth. Energy revenue shrank by over a third last month, hit by lower crude prices amid international sanctions and reduced gas exports to Europe.

      What Bloomberg Economics Says…

“Russia’s censorship of statistics and reporting is driven by two main objectives: making it harder to calibrate sanctions on its economy and to downplay the scale of public military spending.”

—Alexander Isakov, Russia economist.

With the budget becoming less transparent, Russia is facing increased country risks that reached a record high in Geoquant indices this month. 

The lack of disclosure is also at odds with efforts by some top officials to dial back the restrictions.

“There will be no investment without disclosure of information,” central bank Governor Elvira Nabiullina told the upper chamber of the country’s parliament on Wednesday. “So we need to restore the publication of financial statements.” 

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