Russia Deliberately Weakens Rouble to Boost Federal Budget Revenue
· Business · Hindustan Times, The Economist
The Russian Ministry of Finance is intentionally weakening the rouble by increasing its daily purchases of foreign currencies and gold by 20%. This policy shift aims to boost tax revenue from state-linked oil and gas exporters, whose dollar-denominated earnings were translating into fewer roubles than the government's budget projections assumed. The rouble has slid from 80 to over 85 against the dollar since early August, marking its lowest level since March 2022. Russia faces a first-half budget deficit of 5.7 trillion roubles, significantly exceeding the 3.8 trillion rouble projection for the entire year. To further address the shortfall, the government has also authorized increased borrowing and requested voluntary contributions from Russian businessmen.
Why it matters
The move directly impacts Russia's ability to finance its war against Ukraine by attempting to offset lower-than-expected energy revenues and a widening budget deficit. This currency devaluation risks fueling domestic inflation and increasing the cost of imports for Russian citizens.
Read the original report — Hindustan Times
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