Rising oil prices and exports boost Russia's budget by 21%
The Russian Ministry of Finance announced that state budget revenues from taxes were 21 percent higher last month than in August 2023. Bloomberg reports this is due to the increase in the price of Russian oil and rising exports to China.
Taxes in August contributed to Russia's budget with 778.6 billion rubles (approximately $8.7 billion CAD), a 21 percent increase. The gas and oil industry is primarily responsible for this, emphasizes Bloomberg.
The agency reports that this is due, among other things, to the higher price of Urals crude oil. A year ago, it cost $64.21 per barrel; now, it is $74.01. Another factor influencing this is the growing export of gas to China. According to Bloomberg's calculations, it increased by nearly 33 percent year over year.
Experts warn about Russian economy data
Judging by the tax data alone, one might conclude that the Russian economy is financially better off than before the invasion of Ukraine and subsequent sanctions. However, experts see this issue differently. They point to, for example, the deepening problem of inflation, which caused the central bank to raise interest rates in July from 16 to 18 percent.
War, isolation, sanctions, reorientation to China, a gigantic labour force deficit – these are strong inflationary factors, assessed Vladimir Milov. As he explained, the huge amounts of money going to the Russian arms industry drive inflationary pressure but not the economy. Money invested in the arms industry does not translate into economic growth because it does not generate added value, does not stimulate new production chains, pointed out the expert.
An analyst from Yale University, Michał Wyrębkowski, recently warned to approach data on the Russian economy with great skepticism, even - and perhaps especially - if it comes from the International Monetary Fund.
Media outlets like Bloomberg, The Economist, and the Financial Times use the International Monetary Fund (IMF) data. Since Russia is still part of it, the data is as Russia wants it to be seen, noted the expert. Therefore, in his opinion, misunderstandings arise when assessing economic indicators from a large amount of data, such as GDP.
The expert pointed out that Moscow sells oil even when it is not profitable because if they stopped, they would not be able to resume production due to the lack of Western technology.
