In response to Western sanctions relating to military action in Ukraine, the Russian government is putting into place plans to increase its reserve fund put in place to cover emergency expenses by 273.4 billion rubles.
The sanctions, put in place by a number of countries after Russia invaded Ukraine in February as part of what is described by the Russian government as a “special military operation”, disconnected Russia from the global economic network and global supply channels.
A complete block on oil and gas from Moscow is additionally near to deployment, stripping Vladimir Putin of his highest source of revenue.
Moscow has already promised in excess of 1 trillion rubles in anti-crisis relief to businesses, and social payments to families, which spends the remainder of annual income, meaning there won’t be a budget surplus.
“The funds, among other things, will be used to implement measures aimed at ensuring economic stability in the light of external sanctions,” the Kremlin said in a statement on Sunday.
Designated for additional state spending that was not accounted for in the year’s budget, the reserve fund is a last resort. The budget was accessed for one-off social benefit payments and to assist in the fight with the pandemic in 2021.
The Kremlin said that the main source of the gains to the budget was 271.6 billion rubles of raised energy revenues generated in Q1, with commodity prices rising significantly as a result of the bounceback from the damage caused by the Covid pandemic and the Russian invasion raised the risk of disrupted supply.
Russia is responsible for over 40% of the EU’s natural gas consumption, with a value of approximately $400 million every day. The EU additionally receives 30% of total oil imports from Russia, about $700m each day.