Russia in ‘turmoil’ as Ukraine war blow hole in Kremlin coffers’

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Russia is facing guaranteed “turmoil” as a result of the devastating impact which Vladimir Putin’s invasion of Ukraine almost a year ago has had on the country’s finances, a Kyiv-based economist has said. Vladyslav Vlasiuk said it was the Russian people who will ultimately pay the price for their President’s attempt to “blackmail” the international community as sanctions bite deeper.

Mr Vlasiuk, who works for the Office of the President of Ukraine, was speaking the day after preliminary figures published by the Russian finance ministry revealed Russia’s federal budget deficit for January passed the £20billion mark, pushed up by plummeting energy revenues and the spiralling cost Putin’s war since he sent troops in on February 24, 2022.

He told “It is now blindingly obvious Russia’s bid to create a new ‘ice age’ across the world has failed.

“Instead, its citizens are suffering the consequences as global leaders rightly shun the Kremlin’s attempts at blackmail.”

Mr Vlasiuk added: “This illegal war has and will continue to cost Russian people dearly.

“Not only have thousands died on the front lines, those left behind now face economic turmoil and will be forced to pay the price for years to come.

“Russia’s grandstanding has ultimately blown a hole in its own coffers.”

Nevertheless, Mr Vlasiuk said it was crucial to keep the pressure on.

He explained: “It is clear the steps taken by countries that have been brave enough to implement sanctions are working.

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“But we need to see bolder, tougher action in the coming months, especially against Russian propagandists, if we are going to truly change the course of this conflict.”

The ministry’s figures, published on Monday, revealed the deficit stood at 1.76 trillion roubles (£20.5 billion) last month, while

oil and gas revenue was £4.92billion, down 46.4 percent compared with a year earlier.

Non-oil and gas revenues were down 28 percent at 981 billion roubles (£11.3billion) as a result of the reduced amount generated from domestic VAT and income tax.

Speaking last month, Anton Siluanov, Russia’s finance minister, sought to downplay the damage to Russia’s economy – although he also admitted the rising budget deficit.

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He said: “I want to say that last year we overfulfilled the income plan. The total volume of income amounted, as you said, to almost 28 trillion rubles, which is 2.8 trillion roubles more than we originally planned.

“This was achieved both through oil and gas revenues, due to higher energy prices, and growth in non-oil and gas revenues, including through an increase in value added tax as a result of increased demand in certain periods of the last year. Therefore, we used an additional resource to finance the costs.”

Mr Siluanov said the Russia had simultaneously increasing the amount raised via the financial market.

He continued: “As a result, our budget deficit has increased. This deficit amounted to 3.3 trillion roubles, or 2.3 percent of GDP.

“But if we take into account the funds that we compensated state off-budget funds as a result of deferrals on insurance premiums, if we subtract these funds from the volume of expenses, then the deficit amounted to 1.8 percent of gross domestic product, that is, less than two percent, as we planned.”

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