DEBT INCREASE IS INEVITABLE DUE TO SPENDING ON MILITARY BLOCS, SAYS RUSSIAN FINANCE MINISTRY

Tue 18 July 2023:

An increase in Russia’s debt burden has become inevitable as Moscow spends on the military and economy, a deputy finance minister said, Reuters reported.

Deputy Finance Minister Irina Okladnikova said Russia’s current level of debt is 22.8 trillion roubles or 14.9 percent of gross domestic product (GDP).

Faced with a January-May budget hole of $42 billion, Russian officials have acknowledged the need to rein in the deficit, agreeing at an economic forum last month that some spending cuts would be unavoidable, while viewing increased domestic borrowing or higher taxes as less appealing alternatives.

“We understand that in the current situation, we will increase debt, it is a hopeless situation,” said Okladnikova at a meeting in Russia’s upper house of parliament.

“We will have to do this because the expenditure part is growing – we need to support the economy, we have to support the military bloc, and our four new regions need significant support.”

The four new regions refer to Moscow’s illegal annexation of Ukraine’s Donetsk, Luhansk, Kherson and Zaporizhia regions.

“Therefore, we will increase debt, but we will try to remain within safe limits,” Okladnikova said. “This (20% of GDP) is the debt ceiling that we should not step over even in the most pessimistic situation.”

In addition to debt increasing, spending is set to fall.

Finance Minister Anton Siluanov said 2024 budget spending would be cut by around 450 billion roubles – 10% of so-called ‘unprotected’ spending – to free up money for other priorities.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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