Putin Says Russia's Growing Budget Deficit Is Not a Critical Risk
Russian President Vladimir Putin said the country's budget deficit, up 40% in the first half of the year, poses no serious threat to the economy, citing Russia's low national debt.
Russian President Vladimir Putin said Thursday at the Eastern Economic Forum in Vladivostok that the growth of the country's budget deficit does not pose a "critical" risk to the economy. The deficit rose 40% in the first half of this year to reach 2.8% of GDP, well above the official annual target of 1.6% of GDP.
Putin argued the situation remains manageable, pointing to Russia's comparatively low level of national debt among world economies.
War costs and rising taxes
The financial burden of Russia's full-scale war against Ukraine, launched in February 2022, has steadily increased. To help cover military spending, the government has raised taxes and expanded borrowing in recent years.
Central bank weighs rate decision
The expanding deficit and inflation risks are among the key factors the Central Bank will consider ahead of its rate-setting meeting next week, with the key rate currently at 14%. Businesses have pressed for months for a rate cut, but analysts polled by Reuters this week expect the Central Bank to leave the rate unchanged.
At the forum, Putin acknowledged that high borrowing costs should not excessively discourage business investment, but stressed that monetary policy must still address inflation risks. Annual inflation stood at 6.3% as of Aug. 31, according to the Economic Development Ministry.
Responding to complaints from businesses that credit has become inaccessible for some, Putin said the government has set up multiple loan programs to support companies even amid the high-rate environment.
