Ukrainian Intelligence predicts looming economic crisis in Russia

According to the spy agency, next week the Russian State Duma will review a government bill to revise federal budget indicators. The main reason for such urgent action is the imbalance between the revenue and expenditure sides of the budget.

In particular, the growing negative trends in Russia's economy are the result of a significant excess of expenditures over revenues - primarily due to the need to finance the war against Ukraine.

"Due to the imbalance, the Russian government is forced to revise the 2025 federal budget by increasing its deficit by 250% (from 12 to 42 billion US dollars). At the same time, the Russian Ministry of Finance declares that the projected GDP growth remains unchanged - at 2.5%, explaining its reasoning with the expected 'increase in non-oil revenues'," the statement says.

As the Foreign Intelligence Service of Ukraine explained, in reality, this means an unprecedented increase in the tax burden on businesses in the history of modern Russia. To normalize the economic situation, the Russian government plans to increase revenue from personal income tax by 180%, corporate income tax by 110%, and value-added tax by 17%. This comes as up to 30% of small and medium-sized businesses in Russia are already on the verge of bankruptcy. By the end of 2025, this figure is expected to rise to 50%.

"According to a statement by Russian Finance Minister Anton Siluanov, 'The priorities of the Russian budget remain unchanged... all national development goals will be achieved regardless of external conditions and factors...' However, the Finance Minister omits the fact that more than 30% of the Russian budget’s revenue depends on oil exports. In the first quarter of 2025, Urals crude oil significantly dropped in price," the Ukrainian spy agency writes.

As of today, purchases of Russian oil in the ports of Primorsk and Novorossiysk are fluctuating between 47-49 US dollars per barrel, while the budget was based on a price of 69.7 dollars per barrel. Thus, Russia's oil and gas revenues could drop by up to 30% annually, or 30-40 billion dollars - which essentially equals the projected budget deficit for this year.

"In the context of manipulated official statistics, the same applies to the inflation rate. The Russian government projects it at 7.6%, while our estimates suggest that actual inflation in Russia already exceeds 20%," the Ukrainian intelligence agency concluded.

Slowing growth of Russian economy

Recently, The Economist wrote that while US President Donald Trump may have a favorable view of Russian dictator Vladimir Putin, his tariff policy has "hit the Kremlin leader in the teeth."

In particular, since the end of 2024, a sharp decline has emerged in the Russian economy. Annual growth rates have dropped from around 5% to zero.

Read more about this in our material on the topic.